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Q2 Preview: Divide and Conquer May Not Be Pfizer's (PFE) Best Option; Pipeline Looks Strong

August 1, 2011 2:59 PM EDT
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Price: $27.75 -0.11%

Rating Summary:
    13 Buy, 20 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 0
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Pharma giant Pfizer Inc. (NYSE: PFE) is trading down Monday on the eve of its second-quarter 2011 earnings report, expected out before the market opens Tuesday.

Pfizer, based in New York, NY, should report earnings of 59 cents per share on revenue of $16.98 billion. The Street's earnings estimate would represent a slight sequential decline, but a 90 percent gain from the 31 cents reported in the same period last year.

Shares gained 2.4 percent through the quarter and are down 8.5 percent since. The stock is up almost 10 percent on the year. Pfizer has bounced between $15.10 and $21.45 over the last 52 weeks.

Looking at Streetinsider's EPS Insider, Pfizer has beaten the Street by about 3.3 percent over the last three quarterly reports.

Data from Bloomberg has 19 analysts with a Buy rating on Pfizer, six at Hold, and two suggesting to Sell. The Street price target average is $24.40, with a low of $21 and high of $30.

Analyst Commentary
  • Goldman Sachs sees EPS of 59 cents for the quarter. Goldman believes Pfizer's plan to spin off its Animal Health unit is a good move, and might unlock its sum-of-the-parts value of $25. "We believe the steps to monetize undervalued assets for shareholders with a focus on fixing R&D are significantly better than the status quo of a massive drug company with a poor pipeline track record and for which any given pipeline drug is unable to move the needle...PFE’s long term value rests on CEO Ian Read’s ability to fix the innovative core and drive the pipeline."

  • JPMorgan is looking for earnings of 60 cents per share from Pfizer. The firm sees inline product trends "with FX and cost cutting representing potential upside drivers to estimates...Looking beyond the company’s recent strategic update, we remain focused on a number of pipeline data points approaching in the near term. These include additional phase III tofacitinib data (ACR in November), crizotinib approval (2H), additional details on the apixaban ARISTOTLE data (full data 8/28), and approval of Prevnar 13 in adults (2H) in 2011."

  • Wells Fargo sees EPS of 56 cents and revs of $17.3 billion. "Focus issues include update on tofacitinib, Eliquis, and bosutinib filings, Oxecta and Remoxy plans, and cost cutting initiatives." On it's pipeline: "Our latest weekly TRx data suggest that Victrelis (approved 5/14/2011) has ~25% market share in the oral hepatitis C protease inhibitor market. We think expectations for the drug are low relative to competitor Incivek (Vertex Pharmaceuticals (Nasdaq: VRTX)), but that Merck's (NYSE: MRK) partnership with Roche (OTCBB: RHHBY) (announced 5/17/2011) could be supporting an effective marketing effort."

  • Deutsche Bank sees earnings of 59 cents per share, with revs of $16.43 billion. Deutsche notes: "Performance in the quarter will be negatively impacted by a number of marketing exclusivity losses: Effexor in the US in mid 2010, Lipitor in Canada and Spain (in May and September 2010 respectively), Aricept in the US in November 2010 (which negatively impacts alliance revenues), Vfend in the US in January 2011, and for Xalatan in the US at the end of 1Q’11."

  • Leerink Swann sees earnings of 59 cents per share and revenue of $16.777 billion. "Investor[s] are now more focused on structure of Animal Health/Nutritionals & use of proceeds is sold, an update on planned dividend increases, and overall fundamental outlook for the late-stage pipeline including apixaban, PCV13 in adults, 4Q crizotinib PDUFA & tofacitinib Ph III data in early Nov."
Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of the release.


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