Pfizer (PFE) Q1 Earnings Beat, COVID-19 Vaccine Boosts Sales

·6 min read

Pfizer, Inc. PFE reported first-quarter 2021 adjusted earnings per share of 93 cents, which comprehensively beat the Zacks Consensus Estimate of 79 cents. Earnings rose 47% year over year.

Revenues came in at $14.6 billion, which beat the Zacks Consensus Estimate of $13.5 billion. Sales rose 45% from the year-ago quarter on a reported basis and 42% on an operational basis mainly driven by sales of Pfizer and partner BioNTech’s BNTX COVID-19 vaccine, BNT162b2. It is a two-shot vaccine for COVID-19, which is now approved for emergency/temporary use in several countries. Global vaccinations are in full swing. The vaccine contributed $3.5 billion in global sales in the quarter. Excluding revenues from BNT162b2, sales grew 8% operationally, in line with the company’s goal of delivering at least 6% compound annual growth rate through 2025.

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

Additional selling days in the quarter also benefited sales, partially offset by non-recurrence of COVID-related customer stocking benefit in the year-ago quarter.

International revenues rose 46% to $6.98 billion. On an operational basis, international sales rose 40% in the quarter. U.S. revenues rose 44% to $7.6 billion.

Adjusted selling, informational and administrative (SI&A) expenses rose 7% (operationally) in the quarter to $2.7 billion. Adjusted R&D expenses rose 19% to $2.0 billion due to costs related to development of COVID-19 vaccines.

Segment Discussion

Oncology revenues increased 16% (on an operational basis) to $2.86 billion. Vaccine revenues were $4.89 billion versus $1.6 billion in the year-ago quarter. Internal Medicine rose 10% to $2.59 billion. The Inflammation & Immunology franchise rose 7% to $1.07 billion. The portfolio of Rare Disease rose 25% to $824 million. Hospital sub-segment’s sales rose 10% to $2.34 billion.

Alliance revenues from Bristol-Myers BMY for Eliquis and direct sales rose 25% to $1.64 billion driven by continued increased adoption in nonvalvular atrial fibrillation as well as oral anticoagulant market share gains in the emerging markets, developed Europe and United States. Xeljanz sales rose 18% to $538 million driven by growth in both the United States and international developed markets.

Xtandi recorded alliance revenues of $267 million in the quarter, up 28% year over year.

Inlyta revenues were $229 million in the quarter, up 34% driven mainly by growth in the United States and developed Europe following FDA approvals in 2019 for 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 $453 million in the quarter, up 88% year over year.

Total biosimilar revenues were $530 million, up 79% year over year driven by new oncology biosimilars (Trazimera, Zirabev and Ruxience) as well as continued growth from Retacrit (a biosimilar of Epogen and Procrit) in the United States

Sterile injectables global revenues rose 4% operationally to $1.48 billion.

Ibrance revenues declined 1% year over year to $1.25 billion due to increase in the proportion of patients accessing the drug through Pfizer’s Patient Assistance Program amid the pandemic.

Global Prevnar 13/Prevenar 13 revenues declined 12% to $1.28. Prevnar 13 revenues declined 20% in the United States due to disruptions in patient visits amid the pandemic. Prevenar 13 revenues declined 3% in international markets.

Enbrel revenues declined 11% to $319 million in key European markets, Japan, and Brazil due to continued biosimilar competition. Pfizer has exclusive rights to Amgen’s AMGN blockbuster RA drug, Enbrel, outside the United States and Canada.

Sutent sales declined 5% to $200 million. Chantix sales declined 21% to $217 million in the quarter.

2021 Guidance

Pfizer raised its previously issued sales and earnings guidance for 2021.

Revenues are expected in the range of $70.5 billion to $72.5 billion versus $59.4 billion to $61.4 billion previously. The mid-point of the revenue guidance indicates growth of 71% from 2020 levels. The revenue guidance includes approximately $26 billion in sales from BNT162b2, much higher than $15 billion expected previously. The guidance includes Pfizer’s contracts, as of mid-April 2021 to deliver $1.6 billion doses of the vaccine globally this year. Excluding BNT162b2, total revenues in 2021 are expected to be in the range of $44.6 billion to $46.6 billion compared with $44.4 billion to $46.4 billion expected previously.

Adjusted earnings per share guidance was raised to a range of $3.55-$3.65 from the prior expectation of $3.10-$3.20. The earnings guidance indicates 59% increase over 2020 actual results. Excluding BNT162b2, EPS is expected to be $2.50 - $2.60 in 2021 (maintained).

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

Research and development expense is expected in the range of $9.8-10.3 billion compared with the prior expectation of $9.2-$9.7 billion. SI&A spending is expected in the range of $11.0-$12.0 billion (maintained). Adjusted tax rate is expected to be approximately 15% in 2021.

Our Take

Pfizer’s first-quarter results were better-than-expected as it beat estimates for both earnings and sales. Pfizer raised its financial outlook for 2021, increasing revenue expectations from BNT162b2, which partly offset expectations of higher R&D costs for the development of COVID-19 vaccines and antiviral medicines.

Shares were up around 1% in pre-market trading. This year so far, Pfizer’s stock has risen 8.2% compared with an increase of 1.8% for the industry.

Importantly, excluding the COVID-19 vaccine, Pfizer’s core drug business also delivered strong growth in the first quarter, which pushed the company to raise its revenue guidance for the core business by $200 million for the year.

Pfizer expects continued recovery from the pandemic throughout the year as a larger section of the population gets vaccinated against COVID-19. Importantly, Pfizer maintained its dividend for the second quarter of 2021 at 39 cents per share. It said it will not be reducing dividend even after Viatris begins paying its dividend. In November last year, Pfizer’s Upjohn unit was divested and combined with Mylan N.V. to form Viatris.

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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