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Will Pfizer (PFE) Disappoint This Earnings Season?

Pfizer Inc. (PFE) is scheduled to report third-quarter 2014 results before the opening bell on Oct 28. Last quarter, the company delivered a positive earnings surprise of 3.57%. Let's see how things are shaping up for this announcement.

Factors Influencing this Quarter

We believe that the strong performance of the Pharmaceuticals segment led by products like Lyrica, Xalkori, Inlyta, Eliquis and Xeljanz will aid results in the third quarter. Eliquis’ label expansion for the treatment of deep vein thrombosis (DVT.V), pulmonary embolism (PE) and prevention of recurrent DVT and PE, both in the U.S. and the EU, will further boost the drugs sales this quarter. However, revenues will continue to be hit by the genericization of several products.

The company also acquired InnoPharma, Inc. during the quarter. The acquisition added 10 approved generic products along with a pipeline of more than 30 injectable and ophthalmic products to Pfizer’s portfolio. The acquisition has strengthened Pfizer’s injectable business (read more: Pfizer Eyes InnoPharma, Acquisition to Boost Injectables Biz).

The approved products from the InnoPharma deal will significantly add to Pfizer’s top line. Pfizer has made an upfront payment of $225 million for the acquisition. Also the company is investing heavily on its pipeline which will affect the bottom line.

Earnings Whispers?

Our proven model however does not conclusively show that Pfizer is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Positive Zacks ESP: This is because the Most Accurate estimate stands at 56 cents per share, while the Zacks Consensus is lower at 55 cents. This results in an ESP of +1.82%.

Zacks Rank #4 (Sell): Pfizer’s positive ESP when combined with a Zacks Rank #4 makes surprise prediction difficult.

Other Stocks to Consider

Here are some companies you may want to consider as our model shows that they have the right combination of elements –- a positive Zacks Earnings ESP and a Zacks Rank #1, 2 or 3 –- to post an earnings beat this quarter.

Teva Pharmaceutical Industries Limited (TEVA) has an earnings ESP of +5.79% and carries a Zacks Rank #2 (Buy). It is scheduled to report its third-quarter results on Oct 30.

The earnings ESP for Ligand Pharmaceuticals Inc. (LGND) is +30.00% and it carries a Zacks Rank #2. The company is scheduled to release its third-quarter results on Oct 27.

Vertex Pharmaceuticals Incorporated (VRTX) has an earnings ESP of +28.07% and carries a Zacks Rank #3. It is scheduled to report its third-quarter results on Oct 28.

Read the Full Research Report on VRTX
Read the Full Research Report on PFE
Read the Full Research Report on TEVA
Read the Full Research Report on LGND


Zacks Investment Research

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