What To Expect From Pfizer’s Q3

by Trefis Team
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Pfizer (NYSE:PFE) is set to report its Q3 2018 earnings on October 30, and we expect the company to post steady top line growth, primarily led by a ramp up in Ibrance sales, along with Eliquis, which has seen market share gains in the recent quarters. Also, the company will likely benefit from growth in its biosimilar sales. Pfizer’s top selling drug Prevnar saw an uptick in Q2 sales, and it will be interesting to see the trends in its sales, which have seen ups and downs in the recent quarters. We continue to believe that Ibrance and Eliquis drug sales will remain the key growth driver for Pfizer in the near term, along with its biosimilars in the pipeline. We have created an interactive dashboard ~ What Is The Q3 Outlook For Pfizer ~ on the company’s expected performance in 2018. You can adjust the revenue and margin drivers to see the impact on the company’s earnings, and price estimate.

Expect Oncology To Continue To See Strong Growth

We expect the company’s Oncology segment to continue to drive top line growth for Pfizer in the near term, primarily led by its breast cancer drug – Ibrance. The drug sales were over $1 billion in Q2 2018, and we forecast it to be around $4 billion for the full year. We forecast the overall Oncology portfolio of Pfizer to grow in the mid-twenties (percent) for the full year to a little under $6.5 billion. Apart from Ibrance, the Oncology segment includes, Sutent, which will likely generate $1 billion in annual sales, along with Xalkori with over $500 million in annual sales. It should be noted that Xalkori is indicated for the treatment of non-small cell lung cancer (NSCLC) which has spread to other parts of the body, and is caused by a defect in a ALK gene (anaplastic lymphoma kinase). Xalkori’s patient pool is limited, but strong pricing indicates that it could earn somewhere between $1-$2 billion in peak sales.

Expect Legacy Pharma, Consumer, Biosimilar & Other Segment To Grow In Mid-High Single Digits While Musculoskeletal May See Low Single Digit Decline

Looking at other segments, Legacy Pharma, Consumer, Biosimilars & Others will likely see mid-to-high single digit revenue growth, primarily driven by Eliquis, which has seen strong growth in the recent quarters, led by market share gains. The drug now accounts for more than half of the prescriptions in the NOAC (novel oral anticoagulant) market. Eliquis’ revenues grew by an impressive 42% in the previous quarter, and it is expected to continue to grow at a strong pace in the near term. The company will also benefit from growth in its biosmilars, such as Inflectra, which generated over $300 million in the first half of 2018. In fact, we expect biosimilars to be one of the key drivers for Pfizer’s future growth. The company has a number of biosimilars in its phase 3 pipeline, with a potential to generate over $10 billion in annual sales. 

Musculoskeletal segment revenues will likely see a low single digit decline, as an expected strong growth in Xeljanz will likely be offset by a decline in Enbrel and other drugs. Xeljanz has been doing well of late, and saw sales jump 37% in the previous quarter. The drug received the U.S. FDA approval for Psoriatic Arthritis in December last year, and it was also approved for Ulcerative Colitis earlier in May this year. This should bode well for the drug’s sales growth in the coming quarters. 

Overall, we expect the company to post adjusted earnings of $2.96 in 2018. We forecast a price to earnings multiple (TTM) of 15.5x, to arrive at our price estimate of $46 for Pfizer, which is at a premium of around 7% to the current market price.


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