Following the release of the first quarter 2011 results on May 3, 2011, annual earnings estimates for 2011 and 2012 for Pfizer Inc. (PFE) have moved in both directions. However, majority of the analysts covering the pharma major have left their estimates untouched as the company maintained its 2011 and 2012 projections following release of the first quarter 2011 financial results.
First Quarter Highlights
Pfizer reported first quarter earnings of 60 cents per share, a couple of cents above the Zacks Consensus Estimate, and flat from the year-ago period. First quarter revenues declined 0.4% to $16.5 billion, just shy of the Zacks Consensus Estimate of $16.6 billion. First quarter 2011 results include the impact of the King Pharma acquisition from Jan 31, 2011.
Including one-time items, earnings increased 12% to 28 cents mainly due to lower costs, a lower tax rate and a lower share count. (Read our full coverage of the earnings report at: Pfizer Tops on EPS, Misses on Revs )
Agreement of Estimate Revisions
2011 earnings estimates have been revised by 7 of the 20 analysts covering the stock over the last 30 days. Five analysts have increased their estimates while 2 have moved in the opposite direction.
We believe that the positive sentiment for 2011 is mainly attributable to the multiple pipeline events lined up in 2011. Pfizer expects to present late-stage data on several candidates including tofacitinib (rheumatoid arthritis), axitinib (renal cell carcinoma), Prevnar/Prevenar 13 (prevention of pneumococcal disease in adults) and Eliquis (stroke prevention in patients with atrial fibrillation) in 2011.
Eliquis is being developed in collaboration with Bristol-Myers Squibb Company (BMY). Pfizer also expects to present mid-stage data on crizotinib for non-small cell lung cancer. Positive news regarding the pipeline should impact the stock positively.
2012 estimates have been revised by only 3 analysts. 2 of them upped their estimates with a sole downward movement. Majority of the analysts have not revised estimates for 2012.
Magnitude of Revisions
2011 estimate has gone up by $0.01 over the last 30 days. 2012 estimate is down $0.01 following movements in both directions over the last 30 days. The current Zacks Consensus Estimate is $2.24 and $2.27 per share for 2011 and 2012, respectively.
Our Recommendation
We currently have a ‘Neutral’ recommendation on Pfizer in the long-run. The stock carries a Zacks #3 Rank (Hold rating) in the short-run. We believe that near-term earnings growth will come in the form of cost-cutting and share repurchases. Longer term growth will be dependent on the success of drug development.
About Earnings Estimate Scorecard
Len Zacks, PhD in mathematics from MIT, proved over 30 years ago that earnings estimate revisions are the most powerful force impacting stock prices. He turned this ground breaking discovery into two of the most celebrating stock rating systems in use today. The Zacks Rank for stock trading in a 1 to 3 month time horizon and the Zacks Recommendation for long-term investing (6+ months). These “Earnings Estimate Scorecard” articles help analyze the important aspects of estimate revisions for each stock after their quarterly earnings announcements. Learn more about earnings estimates and our proven stock ratings at http://www.zacks.com/education/
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