Earnings Preview: Pfizer Inc. (NYSE: PFE) Third Quarter 2010
Friday, October 08, 2010 10:00 AM

Pfizer Inc. (NYSE: PFE), the world's largest drug maker, is scheduled to release its third quarter earnings before the opening bell on Tuesday, November 2, 2010. Analysts, on average, expect the company to report earnings of 51 cents per share on revenue of $16.70 billion. In the year ago period, the company reported earnings of 51 cents per share on revenue of $11.60 billion.

Pfizer Inc., a biopharmaceutical company, engages in the discovery, development, manufacture, and marketing of prescription medicines for humans and animals worldwide.

In the preceding second quarter, the New York-based company's net income was $2.47 billion, or 31 cents a share, compared to $2.26 billion, or 34 cents a share, in the year-earlier quarter. On an adjusted basis, the company earned 62 cents a share in the second quarter. Revenue jumped 58% to $17.3 billion from $10.984 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of 52 cents per share on revenue of $16.65 billion.

At its last earnings call in August, the company reaffirmed its 2010 financial guidance and said that it expects earnings per share to come in at the upper end of the $2.10 to $2.20 range. Reported earnings are anticipated to range between $0.95 and $1.10 per share. Reported revenues are expected to be between $67.0 billion and $69.0 billion. The company noted several factors that will unfavorably impact its revenues for the second half of the year, including LIPITOR's loss of exclusivity in Canada in May of 2010, Effexor's global loss of exclusivity in July of 2010, two additional selling days in the U.S. during the first half of the year versus the second half and continued pricing pressure in Europe. All other things being equal, the combined effect of these factors is expected to decrease second half 2010 revenues by approximately $2 billion.

Pfizer also maintained its 2012 long-range targets. The drugmaker anticipates 2012 revenue in the range of $65.2 billion and $67.7 billion. Earnings per share are expected to range between $1.58 and $1.73 a share, with adjusted earnings of $2.25 and $2.35 a share.

The company remains on-track to achieve the cost-reduction target of about $4 billion to $5 billion by the end of 2012. Pfizer expects to achieve 50% of cost reductions in 2010. In May, the drugmaker announced plans to reconfigure its worldwide plant network to create a fully aligned manufacturing and supply organization from the combined networks of Pfizer and Wyeth. The planned changes will lead to the closing of the company's eight plants and a global reduction of about 6,000 jobs over the next several years. The company will also cut back operations at six other plants as part of restructuring of its global plant network.

Pfizer is trying hard to come up with new drugs that can help replace lost revenue when its blockbuster cholesterol drug Lipitor, which generated $11 billion in 2009, goes off patent late next year. The company currently has 118 programs in Phase 1 through registration, compared to 133 programs at its last pipeline update in January, 2010. The current pipeline includes 26 programs in Phase 3 and nine programs in registration, as well as 27 biologics and four vaccines across all phases of development.

Early in August, the U.S. Food and Drug Administration approved Pfizer's Prefilled Dual-Chamber Syringe for administration of XYNTHA Antihemophilic Factor Plasma/Albumin-Free to hemophilia A patients.

Recently, the company announced that it has ended the clinical trial of Sutent or sunitinib malate for treatment of advanced prostate cancer, one of the most common forms of cancer in men. The decision followed an independent data monitoring committee evaluation that indicated patients who took sunitinib with prednisone showed little improvement when compared to those who took prednisone alone.

Early in September, Pfizer announced that it agreed to acquire the FoldRx, a privately-held developer of drugs for rare diseases like the neurodegenerative disorder called TTR amyloid polyneuropathy.

The company said in August that it is targeting a dividend payout ratio comparable to the current industry average of approximately 40% in about three years. The drugmaker slashed its dividend in half in early 2009 to help fund its $68 billion acquisition of Wyeth. Pfizer's current ratio is about 33%. At its last earnings call, the company indicated that its board would increase the dividend at its December meeting.

In terms of stock performance Pfizer shares have lost nearly 8 percent since the beginning of the year.

Disclosure: Author doesn't own any of the stocks discussed here.



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