Pfizer Inc. PFE is set to report its Q2 earnings results on Tuesday, July 30. Investors are hoping the report can boost PFE stock since it is down over 2% YTD.
It is important to note the large cap pharmaceutical market has been struggling as a whole recently. The Large Cap Pharma market is down roughly 1% so far this year, while the S&P 500 is up 18% in 2019.
Headquartered in New York City, Pfizer is one of the world’s largest pharmaceutical companies. The company is a component of the so-called S&P 100 and ranked No. 57 on the Fortune 500 list in 2018. Pfizer produces popular over-the-counter drugs such as Advil and Robitussin, as well as a variety of prescription drugs including Lipitor, Viagra, Xanax, and Zoloft.
Along with some of the most popular drugs on the market, Pfizer boasts a major research and develop leg, as do many pharma companies. Pfizer had 97 drugs in its product pipeline as of April 30, according to its website. Over a third of these drugs are currently in the clinical trial phase, or being registered/approved by the FDA.
PFE is trading with a P/E of 14.72 at the moment. This is just above the industry average of 14.42, but Pfizer has historically traded below its peers. Although the stock is down YTD, it has gained 7% over the past 3 months. In that same time period, its forward earnings estimates have not increased at the same rate which has caused its P/E to increase substantially. Because of this, PFE could potentially be overvalued at its current price of $42.89.
Pfizer also pays a dividend and it has increased its payout by $0.08 annually every year since first announcing its dividend in 2009. PFE’s annual dividend is currently $1.44 a share, with a strong 3.4% yield at the moment.
Q2 Outlook & Earnings Trends
In Q2, Pfizer is expected to earn $13.42 billion in revenue, according to our Zacks Consensus Estimates. That number falls 0.31% below the year-ago period’s revenue of $13.47 billion. Revenue shrinkage is not expected to end after this quarter either, with Q3 revenues projected to sink 4.26%. And overall fiscal 2019 sales are expected to fall 1.47%.
Looking back, Q1 revenue did pop 2% year-over-year, primarily driven by growth in key brands and emerging markets. Foreign exchange rates had a significant negative effect on Pfizer’s Q1 financials and this problem may persist in Q2.
Meanwhile, Pfizer’s adjusted EPS figure is also expected to decline. Current estimates call for EPS of $0.77 in Q2, a 4.94% fall from the same period last year. This expected quarterly decline is part of the reason Pfizer’s yearly EPS is predicted to fall 4% from last year.
Pfizer’s growth prospects are not that strong right now. With that said, the company provides income through its solid dividend and PFE stock had tracked the larger market for the better part of a decade, until its recent downturn. In the end, Pfizer is a relatively safe investment given its historical performance and should not be going anywhere anytime soon.
If the firm can post better-than-expected Q2 earnings it may help it to bounce back from its YTD slump. Additionally, any positive updates regarding the progress of its drugs in development could lift PFE stock.
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