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Pfizer (PFE) Q3 Earnings Top, COVID Vaccine Drives 2021 View Up

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·6 min read
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Pfizer, Inc. PFE reported third-quarter 2021 adjusted earnings per share of $1.34, which comprehensively beat the Zacks Consensus Estimate of $1.08 per share. Earnings rose 129% year over year.

Revenues came in at $24.1 billion, which beat the Zacks Consensus Estimate of $22.4 billion. Sales rose 134% from the year-ago quarter on a reported basis and 130% on an operational basis, mainly driven by the sales of Pfizer and partner BioNTech’s BNTX COVID-19 vaccine, Comirnaty. Direct sales and alliance revenues from Comirnaty were $13 billion in the quarter. Excluding revenues from BNT162b2, sales grew 7% operationally.

In addition, higher sales of brands like Eliquis, Vyndaqel/Vyndamax and Inlyta globally, Xtandi in the United States and Ibrance outside the United States, and higher biosimilars and hospital products revenues drove sales growth. Weaker sales of Prevnar 13, Sutent and Chantix globally, Xeljanz and Ibrance in the United States and Enbrel internationally partially offset the increase.

International revenues rose 242% to $17.0 billion. U.S. revenues rose 30% to $7.1 billion.

Adjusted selling, informational and administrative (SI&A) expenses rose 5% (operationally) in the quarter to $2.73 billion. Adjusted R&D expenses rose 19% to $2.74 billion due to costs related to the development of COVID-19 antiviral programs and other pipeline medicines.

Segment Discussion

Oncology revenues increased 11% (on an operational basis) to $3.09 billion. Vaccine revenues were $14.58 billion compared with $1.7 billion in the year-ago quarter. Internal Medicine declined 1% to $2.1 billion. The Inflammation & Immunology franchise declined 7% to $1.09 billion. The portfolio of Rare Disease rose 15% to $869 million. Hospital sub-segment’s sales rose 29% to $2.37 billion.

Alliance revenues from Bristol-Myers BMY for Eliquis and direct sales rose 19% to $1.35 billion driven by continued increased adoption in nonvalvular atrial fibrillation as well as oral anticoagulant market share gains.

Xtandi recorded alliance revenues of $309 million in the quarter, up 16% year over year.

Inlyta revenues were $256 million in the quarter, up 30%, driven mainly by growth in the United States and developed Europe due to the combination use of Inlyta for the first-line treatment of advanced renal cell carcinoma patients

New rare disease drug Vyndaqel/Vyndamax recorded sales of $501 million in the quarter, up 42% year over year.

Ibrance revenues rose 1% year over year to $1.38 billion as recovery in diagnosis rates and treatment initiations outside U.S. markets increased demand. However, sales continued to decline in the United States.

Global Prevnar 13/Prevenar 13 revenues declined 7% to $1.45. Prevnar 13 sales declined 2% in the United States due to a drop in the adult indication. Prevenar 13 revenues declined 13% in international markets.

Total biosimilar revenues were $575 million, up 34% year over year driven by new oncology biosimilars (Trazimera, Zirabev and Ruxience) as well as continued growth in Retacrit (a biosimilar of Epogen and Procrit) in the United States

Sterile injectables global revenues rose 18% operationally to $1.44 billion.

Xeljanz sales declined 7% to $610 million due to an unfavorable change in channel mix and lower new patient starts due to the FDA’s order (given in September) to include aheart-risk warning on the label of Xeljanz, a JAK inhibitor drug, in patients with rheumatoid arthritis.

Enbrel revenues declined 12% to $283 million due to continued biosimilar competition in key European markets and Japan. Pfizer has exclusive rights to Amgen’s AMGN blockbuster RA drug, Enbrel, outside the United States and Canada.

Sutent sales declined 31% to $142 million due to the loss of exclusivity in August. Chantix sales declined 97% to $7 million in the quarter hurt by voluntary recalls across several markets.

Ups 2021 Guidance

Pfizer raised its guidance for 2021

Revenues are expected in the range of $81.0 billion to $82.0 billion compared with $78.0 billion to $80.0 billion previously. The mid-point of the revenue guidance indicates growth of 94% from 2020 levels compared with 89% previously.

The revenue guidance includes approximately $36.0 billion in sales from Comirnaty, higher than $33.5 billion expected previously. Pfizer/BioNTech expects to deliver 2.3 billion doses of Comirnaty in 2021.

The adjusted earnings per share guidance was raised to the range of $4.13 to $4.18 from the prior expectation of $3.95 to $4.05. The earnings guidance indicates an 84% increase over 2020 actual results, compared with 77% previously.

Foreign exchange is expected to benefit 2021 revenues and EPS by 3% and 4%, respectively.

Research and development expense is expected in the range of $10.4-10.9 billion compared with the prior expectation of $10.0-10.5 billion to account for potential incremental spending for the development of COVID-19 antiviral medicines as well as other mRNA-based programs. SI&A spending is expected in the range of $11.6-$12.1 billion compared with $11.5-$12.5 billion expected previously. The adjusted tax rate is expected to be approximately 16% in 2021 (maintained).

Excluding Comirnaty, total revenues in 2021 are expected to be in the range of $45.0 billion to $46.0 billion compared with $45.0 billion to $47.0 expected previously. The mid-point of the guidance indicates approximately 6% operational growth year over year. Adjusted earnings are expected in the range of $2.60 to $2.65 per share compared with $2.55 to $2.65 per share previously. The mid-point of the earnings guidance indicates approximately 12% operational growth year over year.

Our Take

Pfizer’s third-quarter results were strong as it beat estimates for both earnings and sales. Pfizer raised its financial outlook for 2021 for the third time this year, mainly due to increasing revenue expectations from Comirnaty.

Shares were up 3.5% in pre-market trading. This year so far, Pfizer’s stock has risen 18.6% compared with an increase of 14.4% for the industry.

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Comirnaty was developed in record time. It is now approved for emergency use in several countries and has become a key contributor to the topline. In September, the FDA granted emergency use authorization (EUA) to a booster or “third” dose of Pfizer/BioNTech COVID-19 Vaccine for individuals 65 years and older and also those in high-risk groups. Last week, the FDA granted EUA to the COVID-19 Vaccine for children 5 through 11 years of age, making it the first vaccine to be authorized in the United States for this age group. The vaccine can be rolled out once the U.S. Centers for Disease Control and Prevention (CDC) recommends its use in the age group.

These approvals should bring in higher Comirnaty revenues in the future quarters.

Pfizer also expects strong growth of key brands like Ibrance, Inlyta and Eliquis to drive sales. It also boasts a sustainable pipeline with multiple late-stage programs that can drive growth.

Pfizer currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Pfizer Inc. Price, Consensus and EPS Surprise

Pfizer Inc. Price, Consensus and EPS Surprise
Pfizer Inc. Price, Consensus and EPS Surprise

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

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