Pfizer’s Earnings Were Good, but Not Quite Good Enough

biotech-dnaDrug giant Pfizer Inc. (NYSE:PFE) on Tuesday posted estimate-beating earnings results and reaffirmed its full-year outlook, but the shares lost ground in early trading after a prolonged run-up heading into the report.

The New York City-based company reported adjusted second quarter net income of $0.64 per share, beating Wall Street estimates of $0.62. Revenue rose 10.9% from last year to $13.15 billion, also beating analyst estimates of $13.01 billion.

Looking ahead, the company reaffirmed its full-year guidance for earnings of $2.38 to 2.48 per share on revenue of $51 to $53 billlion. That forecast straddles analyst expectations: on average, consensus estimates are for EPS of $2.45 and revenue of $52.6 billion.

Other highlights from the report included:

  • Revenues in developed markets grew $1.5 billion, or 17%, operationally
  • In emerging markets, revenues increased $116 million, or 4%, operationally
  • Innovative Health (IH) revenues increased 9% operationally
  • Essential Health (EH) revenues increased 19% operationally

CEO Ian Read commented, “Our continued sharp focus on executing against the distinct strategies for both our Innovative Health and Essential Health businesses has delivered a strong financial performance during the second quarter as well as for the first half of 2016. This performance was driven by all areas of the company, reflecting ongoing strength from our recent product launches and key in-line products, the contribution of legacy Hospira products, continued improvement in the revenue profile for our standalone Essential Health business, the advancement of our product pipeline and sound capital allocation choices.

Continuing, “Furthermore, I see our product pipeline along with the assets obtained from our recent business development initiatives as positioning the Company competitively in those areas where I believe Pfizer’s strengths can generate significant shareholder value over time while also benefiting patients.”

Pfizer shares fell $0.56 (-1.50%) to $36.75 in premarket trading Tuesday. PFE has gained 15.58% year-to-date, more than doubling the returns of the S&P 500 in the same period. This outperformance made the stock priced to perfection heading into today’s report, hence the pullback on better-than-expected results and an in-line forecast.

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