Key Takeaways From Pfizer’s Earnings

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Pfizer’s Q1 2016 earnings re-affirmed our bullish stance on the stock. We have upgraded our price estimate to $37 per share. Here are the key takeaways from the earnings that investors should keep in mind.

 

Takeaway 1:  Pfizer’s Growth Is Bouncing Back

  • Q1 2016 revenues grew 26% year over year to $13.0 billion, excluding currency effects
  • Excluding Hospira acquisition and five additional sales days, the growth rate was 7%
  • This is a substantial improvement considering Pfizer’s revenues have declined ~ 28% in last 5 years
  • Key drivers: cancer drug Ibrance, musculoskeletal drug Xeljanz, Prevnar vaccine & blood thinner Eliquis
  • We have upgraded 2016 revenue growth forecast from 5.5% to 7.8%
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Takeaway 2:  Bet On Hospira, Pipeline & Current Growth Drivers Could Lend Long Term Support

Hospira acquisition and its impact:

  • Positions Pfizer strongly in sterile injectables & biosimilars
  • Three biosimilars in the market: Inflectra, Nivestim, and Retacrit
  • Inflectra approved by the FDA, could pave way for others

Pipeline

  • Nine new compounds in Phase 3 clinical trials with combined peak sales potential of ~ $10.5 billion

Current Growth Drivers

  • Drugs that drove Q1 2016 growth: Ibrance, Xeljanz, Prevnar & Eliquis
  • Their combined sales can jump from  $8.8 billion in 2015 to $16 billion in 2020

 

Takeaway 3:  Inversion Deals Are Likely Off In The Near Term

  • Pfizer and Allergan recently called off the proposed merger, following government’s move to make tax inversion strategy less rewarding
  • Pfizer has made it clear that another such deal is unlikely in the near future
  • However, given Pfizer’s history of financial engineering, a split that separates company’s legacy and growth products is not entirely unlikely

 

Have more questions about Pfizer? See the links below.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Pfizer

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