Pfizer Earnings Preview: Ibrance To Drive Q1 Growth

by Trefis Team
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Pfizer (NYSE:PFE) is set to report its Q1 2018 earnings on May 1, and we expect the company to post steady growth, primarily led by a ramp up in Ibrance and Xeljanz sales. Both drugs have seen solid growth in recent quarters, and this trend is likely to continue in Q1 as well. It will also be interesting to see the trends in Prevnar sales, which saw a slight decline in 2017. It should be noted that Prevnar is the top selling drug for Pfizer, with 2017 sales of over $5.6 billion. Of late, Prevnar’s sales have slowed somewhat due to a decline in vaccination rates. This trend is likely to continue in the near term. In the long run, we continue to believe that Oncology drug sales will remain a key growth driver for Pfizer, primarily led by Ibrance, and its new drug Bavencio. We have created an interactive dashboard on Pfizer’s expected performance in 2018. You can adjust the revenue and margin drivers to see the impact on the company’s performance.

Expect Ibrance Sales To Drive Growth

We expect the company’s Oncology segment to continue to drive growth for Pfizer in Q1, and beyond. Ibrance, which is a used for the treatment of breast cancer, has seen solid growth of late, and we expect this to continue in 2018 with an estimated 20% jump in sales to $3.8 billion. Beyond Oncology, many of Pfizer’s other segments will likely see declines in the near term, and beyond, as many of its drugs have either lost patent exclusivity or are about to lose it over the next couple of years. Having said that, the company’s cardiovascular drug Eliquis has been on a strong run for a while now, and we expect this trend to continue in the near term, as the drug continues to increase its market share. It should be noted that we record Eliquis sales under the Legacy Pharma, Consumer, Biosimilars & Other segment in our model. Looking at other drugs, Lyrica could see steady growth in the near term. However, it will lose its U.S. patent protection later this year, and the future sales will likely be impacted by biosimilar competition. Lyrica is the second highest selling drug for Pfizer, with 2017 sales of over $5 billion. Pfizer’s Q1 earnings should also benefit from lower tax rates. The company in its previous earnings call guided for a 17% effective tax rate in 2018 on adjusted earnings.

We currently have a price estimate of $35 for Pfizer, which is roughly 5% below the current market price.

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