Pfizer (PFE) To Report Q3 Earnings: What's In The Cards?

Pfizer, Inc. (NYSE:PFE) will report its third-quarter 2019 results on Oct 29, before market open. In the last reported quarter, the company delivered a positive earnings surprise of 3.90%.

This pharma giant’s earnings surpassed expectations in each of the last four quarters, delivering an average positive surprise of 4.63%.

Pfizer’s shares have declined 15.8% this year so far compared with a decline of 0.3% for the industry.

Factors at Play

Higher sales of Pfizer’s key brands, Eliquis and Ibrance in the Biopharma segment, biosimilars and strong emerging markets sales are likely to have made up for lower sales in the Upjohn group. Continued strong uptake in developed Europe and Japan as well as in certain emerging markets and consistent growth in the United States are likely to have driven Ibrance’s sales. Meanwhile, higher sales from Xalkori and Chantix and alliance revenues from Astellas for Xtandi are likely to have aided top line.

The Zacks Consensus Estimate for sales of Ibrance (worldwide) and alliance revenues from Eliquis is $1.21 billion and $1.01 billion, respectively.

However, sales of some key drugs like of Prevnar 13/Prevenar 13 and Enbrel declined in the second quarter. It remains to be seen if sales of these drugs have improved this time around.

The Zacks Consensus Estimate for sales of Enbrel and Prevnar is $469 million and $1.59 billion, respectively.

In the Upjohn segment, sales of key drug Lyrica are likely to have declined as the drug lost exclusivity in July. Viagra sales are likely to have declined due to generic competition that began in December 2017.

We remind investors that in July, along with its second-quarter earnings release, Pfizer lowered its previously issued sales and earnings guidance for 2019 to reflect the formation of the Consumer Healthcare joint venture with Glaxo (NYSE:GSK) and the Array BioPharma acquisition.

Other than this business development activity, an incremental negative impact of foreign exchange and unfavorable product developments in case of Prevnar (vaccine)and Xeljanz (autoimmune diseases) led to the guidance cut. These negative developments are expected to have weighed on sales of Prevnar and Xeljanz.

In July, Xeljanz’s prescribing information in the United States was updated by the FDA to include two additional boxed warnings as well as changes to the indication and dosing for ulcerative colitis indication following review of a post-marketing study. Pfizer had stated on the second-quarter call that the label update may affect prescribing and sales in the future quarters. The Zacks Consensus Estimate for sales of Xeljanz is $564 million.

Meanwhile, due to some unfavorable revisions in Advisory Committee on Immunization Practices’ (ACIP) pneumococcal vaccination guidelines for Prevnar 13 in adults across the United States, Pfizer, back then, had said that it expects some decline in demand for Prevnar, which can weaken sales in the future quarters.

Investors will be keen to know the impact of these unfavorable product developments on third-quarter sales of Prevnar and Xeljanz

Meanwhile, Pfizer’s sterile injectables portfolio has been seeing lower revenues since the last few quarters due to persistent legacy Hospira product shortages in the United States. The company is facing supply scarcity for sterile injectable products, mainly due to capacity constraints and technical issues. The trend is expected to have continued in the third quarter

Importantly, in July, Pfizer announced a definitive agreement stating that it will spin off its Upjohn unit and combine it with generic drugmaker Mylan (NASDAQ:MYL) in a Reverse Morris Trust transaction to create a generic pharmaceutical company. An update is expected on the conference call.

What Our Model Indicates

Our proven model does not conclusively predict an earnings beat for Pfizer this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: Its Earnings ESP is -0.79%. The Zacks Consensus Estimate stands at 63 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Pfizer carries a Zacks Rank #3.

Stocks to Consider

Here are some large drug/biotech stocks that have the right combination of elements to beat on earnings in their upcoming release:

Glaxo has an Earnings ESP of +3.03% and a Zacks Rank #2. The company is scheduled to release results on Oct 30. You can see the complete list of today’s Zacks #1 Rank stocks here.

Amgen, Inc. (NASDAQ:AMGN) has an Earnings ESP of +0.50% and a Zacks Rank #3. The company is scheduled to release results on Oct 29.

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