Pfizer Lowers 2013 Forecast After Sales Miss EstimatesDrew Armstrong
Pfizer Inc., the world’s biggest drugmaker, reduced its 2013 profit forecast after first-quarter sales missed analyst estimates. The shares had their worst one-day loss since August 2011.
Full-year earnings excluding one-time items may be $2.14 to $2.24 a share as foreign currency rates weigh on results, New York-based Pfizer said today in a statement. The forecast cuts by 6 cents the range provided by the company in January. First-quarter net income surged 53 percent to $2.75 billion, or 38 cents a share, from $1.79 billion, or 24 cents, a year earlier.
Sales for the pneumococcal vaccines Prevnar and the erectile dysfunction drug Viagra were less than analyst estimates, leading total revenue to fall about $440 million short of expectations, at $13.5 billion.
It was “clearly not a great quarter,” said Mark Schoenebaum, an analyst with International Strategy & Investment Group in New York, in a note to clients today. “However, it appears that the company will attribute a large portion of the miss, but not all, to one-time factors such as U.S. buying patterns and foreign exchange.”
Pfizer shares fell 4.5 percent to $29.07 at the close in New York. The stock has gained 27 percent in the last 12 months.
Exchange rates for foreign currency including the Japanese yen trimmed 4 cents off the full-year forecast, Pfizer said. The other 2 cents were tied to the initial public offering of Zoetis Inc., the animal health unit, the drugmaker said. Excluding certain items, earnings were 54 cents a share, 1 cent below the average of 17 analysts’ estimates compiled by Bloomberg.
Investors have been closely watching whether Pfizer may split in half after shedding two non-drug units over the last year, into separate brand-name and generic drugs businesses. Such a split is “perhaps the last big lever management has left to pull,” Tim Anderson, an analyst with Sanford C. Bernstein & Co., said before the earnings were released.
Pfizer has been working to remake itself after it lost exclusive sales rights to Lipitor in 2011, the anti-cholesterol pill that was once the world’s top-selling medicine with almost $13 billion. The company won U.S. marketing approval in the past six months for two new potential blockbusters, the rheumatoid arthritis pill Xeljanz and the blood thinner Eliquis.
Pfizer may bring an experimental breast cancer treatment to market under an accelerated approval program offered by U.S. regulators. Called palbociclib, data released in December showed the drug stopped disease progression for more than two years in 165 patients.
$5 Billion Drug
The compound may generate as much as $5 billion a year if approved by regulators, according to Seamus Fernandez, an analyst with Leerink Swann & Co.
Pfizer divested its animal health and infant nutrition businesses over the last year, part of Read’s strategy to create a more-focused business.
While a further divide “would create a certain, nontrivial amount of dis-synergies, investors would nonetheless likely reward this bold action with a higher valuation,” Anderson said in an April 10 note to clients.
Pfizer didn’t provide sales figures for Eliquis, which is being co-promoted with Bristol-Myers Squibb Co., or Xeljanz. Bristol-Myers, based in New York, last week said its sales from the drug were $22 million, about half of what analysts had projected.
Pfizer’s biggest products are the pain pill Lyrica and the two pneumococcal vaccines sold under the name Prevnar 13 and Prevnar 7. Lyrica’s revenue increased 12 percent to $1.07 billion. Sales of Prevnar-13, the newer vaccine, fell 11 percent to $846 million, which the company said was caused by irregular government ordering patterns.
While Lipitor no longer has patent protection, Pfizer has managed to hold on sales of the drug in the face of generic competition. The pill generated $626 million, more than analyst estimates of $530 million, and remains Pfizer’s fifth-biggest product. Viagra sold $461 million, less than estimates of $513 million.
Zoetis, the animal health unit that Pfizer spun out in a February initial public offering, also reported first-quarter earnings today.
Net income rose 26 percent to $140 million, or 28 cents a share, from $111 million, or 22 cents, in the same period a year earlier, Zoetis said. Earnings excluding one-time items were 36 cents, topping by 3 cents the average of 13 analysts’ estimates compiled by Bloomberg.
Revenue rose 4.1 percent to $1.09 billion, helped by a boost in sales of products for companion animals in the U.S. and other regions, the Madison, New Jersey-based company said today in a statement. Profit this year will be $1.36 to $1.42 a share, Zoetis said. Fourteen analysts had estimated $1.38 a share, according to the average of estimates compiled by Bloomberg.
“The first quarter looks excellent and guidance is solid,” Schoenebaum, the ISI Group analyst, wrote today in a note to clients.