Pfizer’s Q4 Earnings And What Lies Ahead For The Company In 2019

by Trefis Team
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Pfizer (NYSE:PFE) recently posted its Q4 results, which were slightly above the street estimates. The company’s overall sales grew 5%, while adjusted earnings per share was up 3%. As expected, the company saw higher sales for Ibrance, Eliquis, and Xeljanz, which aided the overall earnings growth. Looking forward, the company expects a $2.6 billion headwind from products that have either lost marketing exclusivity or are about to lose it in the near term. This will likely have an impact on margins as well. As such the company will likely see modest revenue growth, and a low single-digit decline in adjusted earnings in 2019. We have created an interactive dashboard ~ A Quick Snapshot of Pfizer’s Q4 Performance And Trefis Estimates For The Full Year 2019. You can adjust various drivers to see the impact on the company’s overall earnings, and price estimate.

Expect Revenues To See Modest Growth In 2019

We forecast the company’s overall revenues to see modest growth in 2019. Innovative Health will likely see higher sales from Ibrance, Eliquis, and Xeljanz. Ibrance saw a 32% jump in sales to north of $4 billion for the full year 2018. It is the leader in CDK 4/6 (cyclin-dependent kinase) inhibitor class in the U.S., with 90% share in terms of new prescription volume. The future growth will likely come from expansion in international markets, primarily Europe and Japan. Xeljanz has been doing well of late with sales growth of around 33% in 2018. It will likely continue to see strong growth, given its approval for Ulcerative Colitis last year. Looking at Eliquis, the drug has seen strong growth in the recent quarters, led by market share gains. In fact, it is now the leader in terms of total prescriptions in the oral anticoagulants (OAC) market in the U.S. The growth will likely continue in the near term, and aid the company’s alliance revenues. 

While the above drugs will boost the top line growth for Pfizer, some of its drugs have either lost patent exclusivity in the recent past or are about to lose it in the near term, and this will weigh on the overall revenue growth in 2019. The company’s blockbuster drug Lyrica, which generated close to $5 billion in sales in 2018, will lose marketing exclusivity in the U.S. in mid-2019. This will likely result in price cuts and generic competition.

The company recently entered into an agreement with GSK to form a new joint venture for the consumer healthcare business. The company expects the deal to close in mid-2019. Note that Pfizer’s consumer healthcare segment generates over $3.5 billion in annual sales.

We currently estimate the full year 2019 revenues to be a little under $53.80 billion, and earnings of $2.90 per share on an adjusted basis, reflecting a y-o-y decline in the low single digits. Our price estimate of $53 for Pfizer is based on an 18x forward price to earnings multiple.

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