Pfizer’s Q3 Earnings Preview: It Is More About Long-term

+3.09%
Upside
27.75
Market
28.61
Trefis
PFE: Pfizer logo
PFE
Pfizer

Pfizer Inc. (NYSE: PFE) is set to report its Q3’16 earnings on November 1st. The company reported revenue growth of 4% last quarter on year-over-year basis, excluding Hospira which it acquired in September last fiscal year. Although Pfizer has a number of major blockbuster drugs, much of its offering is exposed to patent expiry and generic competition. We expect organic revenue growth (excluding acquisitions) to be in low single digit in Q3’16 on a year-over-year basis. The table below presents analyst consensus estimates for the quarter:

p2

While the recent performance looks lackluster, it is the long-term prospects that we are more upbeat about. Pfizer has rich pipeline of drugs including biosimilars of some blockbusters. In addition, we expect management to pursue more M&A going forward.

Our price estimate of $38 for Pfizer is about 16% above the current market price

Relevant Articles
  1. Should You Pick Pfizer Stock At $30 After A 30% Fall In A Year?
  2. Should You Pick Pfizer Stock At $30?
  3. Down 25% In A Year Will Pfizer Stock Rebound To Its Pre-Inflation Shock Level?
  4. Will Pfizer Stock See Higher Levels Post Q1 Earnings?
  5. Is Pfizer Stock Undervalued At $40?
  6. This Logistics Company Appears To Be A Better Pick Over Pfizer Stock

You can use our widget embedded below to build your own scenario reflecting the impact on price.

Why Are We Positive About Pfizer’s Long-term Performance?

Pfizer is known for growth through acquisitions. Recently, it completed the acquisition of Medivation in a deal valued at $14 billion. With this move, Pfizer now has 3 products – Ibrance, Xtandi and Sutent – in oncology which will generate over $1 billion each in revenue this fiscal year. Moreover, the company also has strong drug pipeline a total of 9 drugs in various stages of registration with the FDA and 29 in Phase 3 trials as of August 2016. Furthermore, the acquisition of Hospira has given Pfizer the capability of developing additional biosimilars. As of August this year, the company had five biosimilars in Phase 3 and one in registration phase. Some of the biosimilars in Phase 3 are versions of blockbuster drugs such as Abbvie’s Humira and Roche’s Avastin. Moreover, Pfizer recently announced that it will start shipping Inflectra in the U.S., a biosimilar of J&J’s Remicade, towards the end of November this fiscal. Remicade generates over $6.5 billion in annual sales. If Inflectra grabs just about 15% market share it will translate into $1 billion in revenue. The company plans to sell Inflectra at around 15% discount to Remicade in the U.S.

Pfizer’s market capitalization is close to $200 billion. Its stock has not been performing well for quite time now. The total daily year-to-date return for Pfizer is about 4.2% while that for S&P 500 6.3%. There were plans to split the company into two – innovative health and essential health – in order to unlock shareholder value. But the management decided against the split. So, going forward into next fiscal year we expect to see pick-up in acquisition by the company in order to drive growth.

 

We care deeply about your inputs, and want to ensure our content is increasingly more useful to you. Please let us know what/why you liked or disliked in this article, and importantly alternative analyses you want to see. Drop us a line at content@trefis.com

Have more questions about Pfizer? See the links below.