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Can Pfizer (PFE) Deliver a Beat in Coronavirus-Hit Q2 Earnings?

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Zacks Equity Research
·6 min read
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We expect Pfizer, Inc. PFE to beat expectations when it reports second quarter results on Jul 28, before market open. In the last reported quarter, the company delivered a positive earnings surprise of 12.68%.

The drug giant’s performance has been mixed with the company exceeding earnings expectations in three of the last four quarters while missing in one. The company has a four-quarter earnings surprise of 8.03%, on average.

 

Pfizer Inc. Price and EPS Surprise

 

Pfizer Inc. Price and EPS Surprise
Pfizer Inc. Price and EPS Surprise

Pfizer Inc. price-eps-surprise | Pfizer Inc. Quote

Pfizer’s stock has declined 6.9% this year so far against an increase of 2.5% for the industry.

 

 

 

Factors to Consider

Higher sales of Pfizer’s key brands, Eliquis, Ibrance and Inlyta, in the Biopharma segment, and higher biosimilar revenues are likely to have made up for lower sales in the Upjohn group.

Within the Biopharma group, the Zacks Consensus Estimate for oncology and vaccine products is pegged at $2.6 billion and $1.23 billion, respectively. The Zacks Consensus Estimate for the Upjohn group is $1.82 billion.

However, sales of some key drugs like Prevnar 13/Prevenar 13 in the United States and Enbrel in international have been declining for the past few quarters. We do not expect and improvement this time around.

However, in the quarter, Pfizer is likely to have seen slower rates of new prescriptions for certain drugs and fewer vaccines administered due to widespread restrictions on patient visits to doctors amid coronavirus-related lockdown. The impact on patient starts is expected to have been minimal for Ibrance and Eliquis in the second quarter. Vyndaqel and Xeljanz are likely to have seen a drop in new patient starts. A temporary slowdown in Prevnar vaccinations is likely to have hurt the vaccine’s sales in the second quarter. Sales of Chantix are expected to have been significantly impacted as it is administered on visiting a doctor.

Pfizer’s sterile injectables portfolio is likely to have benefited from higher demand due to the COVID-19 pandemic and manufacturing recovery efforts that have started taking shape. Pfizer’s anti-infective medicines, as well as other sterile injectable products have been utilized in the incubation and ongoing treatment of mechanically ventilated COVID-19 patients.

In the Upjohn segment, sales of key drug Lyrica are likely to have declined due to multi-source generic competition that began in July 2019. Also, lower sales of Lipitor and Norvasc in China, following the implementation of the VBP program in the country in December 2019, are expected to have further hurt this segment.

Back in April, Pfizer had said that it expects trends of patient visit to doctors, vaccinations and elective surgical procedures to improve in the second half of the year. It had also said that it expects enrollment in clinical studies and new study starts to resume in the second half of the year. An update related to the same is expected on the second-quarter conference call.

Key Recent Development

On Monday, Pfizer and its German-based partner BioNTech BNTX announced initial positive data from the phase I/I German study on the most advanced (BNT162b1) of their four experimental mRNA-based vaccines, being evaluated under BioNTech’s BNT162 program, to prevent COVID-19.

The data showed that BNT162b1 vaccine elicited high, dose level-dependent SARS-CoV-2-neutralizing titers after the second dose was administered. Importantly, the data showed that BNT162b1 elicited high level CD4+ and CD8+ T cell responses against the SARS-CoV-2 receptor-binding domain (RBD). The data were very much in line with the early positive data from the I/II U.S. clinical study of BNT162b1, which was announced earlier in July. Overall, the data showed that BNT162b1 can be administered safely, with a manageable tolerability profile. The preliminary data from the U.S. and German studies along with the preclinical data and other clinical data, when available, will be used by the companies to select the lead candidate and dose level for a larger, global phase IIb/III safety and efficacy study that may begin later this month

Earlier this month, the FDA granted fast track designation to two (BNT162b1 and BNT162b) out of the four experimental mRNA-based vaccines

Meanwhile, Pfizer also announced a deal with the U.K. government to supply 30 million doses of their COVID-19 vaccine in 2020 and 2021, subject to regulatory approval or authorization.  Eventually, if the vaccine is approved this year, Pfizer plans to manufacture up to 100 million doses by the end of this year and potentially more than 1.2 billion doses by the end of 2021.

Earnings Whispers

Our proven model predicts an earnings beat for Pfizer in the soon-to-be-reported quarter because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for a likely positive surprise.

Earnings ESP: Pfizer’s Earnings ESP is +1.04% as the Most Accurate Estimate of 65 cents is higher than the Zacks Consensus Estimate of 64 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Pfizer has a Zacks Rank #3.

Other Stocks to Consider

Here are some other large drug/biotech stocks that have the right combination of elements to beat on earnings this time around:

Sanofi SNY with an Earnings ESP of +4.15% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Bristol-Myers Squibb BMY has an Earnings ESP of +0.23% and a Zacks Rank #2

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Sanofi (SNY) : Free Stock Analysis Report
 
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