Pfizer beats Q1 earnings and revenue estimates; stock climbs 3%

Posted: 3 May 2022 2:11 pm
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COVID-19 treatment sales jumped, making the stock more attractive to investors seeking protection against a market downturn.

Pfizer (PFE) first quarter earnings and sales beat analysts’ estimates, bolstering the case for owning pharmaceutical companies at a time of great economic uncertainty.
Before the latest results were released, the stock was trading at 12.3 times earnings, a better value than the S&P 500 which was at 20.3 times. Pfizer had a dividend yield of 3.3%, higher than the broader index’s 1.8%, according to Refinitiv data.
Investors are seeking value and recession-resistant opportunities amid mounting fears that high inflation will prompt the Federal Reserve to aggressively hike interest rates, pushing the economy into a recession. As policy makers decide the fate of borrowing costs in a meeting that will end tomorrow, money is pouring into Pfizer because it is seen offering better returns during an economic downturn.
“We expect an improved outlook for 2022, partly predicated on a return to normalcy, with improved medical utilization and electives demand,” CFRA analyst Stewart Glickman said in a note April 30, referring to the industry. “Key therapeutic areas seen as essential, such as oncology and immunology, should continue to see strong growth. We also expect added positive contributions from Covid-19 therapies and cost management initiatives.”

First-quarter financials exceeded analysts’ expectations

Revenue ballooned 77% year over year to $25.7 billion for the first quarter, buoyed by sales of the COVID vaccine and treatment, the company said. That exceeded the $23.86 billion average estimate of analysts tracked by Yahoo Finance. Profit grew 61%.
Comirnaty, the company’s Covid vaccine, brought in $13 billion in sales, and the treatment Paxlovid added another $1.5 billion. Pfizer reported growth across all its businesses except internal medicine and inflammation and immunology, which declined 6% and 23%, respectively.
Adjusted earnings also rose for the quarter, climbing 72% to $1.62 per share and topping analyst’s estimates that called for $1.47 per share.
The company maintained its 2022 sales guidance for its COVID-19 vaccine at $32 billion. That missed the $34 billion average analyst estimate, according to Bloomberg data. The vaccine is called Comirnaty, which the company makes in partnership with BioNTech SE (BNTX).
Pfizer also kept its outlook for sales of Paxlovid, the Covid treatment, at $22 billion, disappointing analysts who on average, expected the company to raise the forecast to $27 billion, according to Bloomberg.
Pfizer also revised its full-year 2022 earnings guidance, which is now expected to come in lower than previously forecast. The company trimmed its expected earnings to reflect a $0.11 negative accounting policy change, as per a request from the US Securities and Exchange Commission (SEC) to change how the company accounts for adjusted income. It now expects adjusted earnings of $6.25 to $6.45 per share, down from $6.35 to $6.55.
This all sent shares declining in the first 15 minutes of trading in New York, before turning positive.

Thinking of buying Pfizer stock?

Pfizer reiterated on Tuesday that it doesn’t expect COVID to be fully eradicated in the foreseeable future, which means the company should continue to see revenue from its COVID products. The company said it expects durable COVID–19 revenues driving growth from 2025 to 2030. As of February 5, Pfizer said Comirnaty represents 70% of all doses distributed across the US and EU. It expects to produce a total of 120 million courses of Paxlovid in 2022.
Despite concerns that Pfizer’s COVID related sales may stagnate, it appears investors still see the value in holding the stock as the Fed keeps raising interest rates to curb inflation.
Of the 22 analysts covering the stock, 12 give it either a Strong Buy or Buy, versus nine Holds and one Sell. Wall Street gives the stock an average price target of $60.29. Based on a share price of $49.51 as of 12:02 p.m. on Tuesday, this would represent a 22% premium.
For more information and a five-year view of the performance of this stock, see our dedicated guide to Pfizer stock.

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At the time of publication, Matt Miczulski owned shares of PFE and BNTX.

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