Q3 Preview: Pfizer (PFE) Chugging Strong Into Earnings; M&A and Pipeline Key Focal Points (MRK, NVS)
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Pfizer Inc. (NYSE: PFE) is trading higher ahead of the company's third quarter earnings report, scheduled for release ahead of the market tomorrow, November 2, 2010. Shares are up 1.7% in afternoon trading.
PFE is expected to report an EPS of $0.51 on revs of $16.69 billion. Last quarter, the New York, NY-based pharma reported an EPS of $0.62, ex-items, on revs of $17.33 billion, both besting views. Last year, in Q309, the Lipitor-maker posted an adjusted EPS of $0.51 on revs of $11.6 billion, both topping estimates.
Shares rose 22% through the quarter, to $17.17 at the end of September. The stock is up 3% since then, and down 3.6% on the year.
A simple valuation puts PFE at 7.7x FY11 EPS estimates, cheap compared to 9.6x for Merck (NYSE: MRK) and 10.9x for Novartis (NYSE: NVS). Pfizer's $0.18 quarterly dividend is also yielding 4.1% currently.
Data from Bloomberg has 20 analysts with a Buy, 5 with a Hold, and two putting a Sell on the stock. The analyst price target average is $20, with a high of $30, and a low of $17.
Analyst Ratings Through the Quarter
In July, Deutsche Bank cut their price target on the shares from $25 to $20, keeping their Buy rating. Deutsche cited "the low visibility of future revenue growth."
Summary
Going into earnings, J.P. Morgan notes that capital deployment at PFE is an underappreciated catalyst. Specifically, "With over $40 billion in post-dividend FCF expected over the next 5 years (2011-2015), we anticipate Pfizer will pursue a combination of increased dividend payment, share repurchases and business development with the later in particular representing a potential positive catalyst for the stock." They also see Pfizer as a less "cliff-exposed" pharma than before, which should translate to a more stable, multiple business going forward. Key pipeline updates to watch for include, "initial Phase III data for CP-690,550 (JAK-3) at ACR in November, the filing of Prevnar 13 adult (2H/10) as well as additional apixaban phase III data (ARISTOLE, 1H/2011)."
Other key items would be current sales of Lyrica, Enbrel, and Prenar vaccines. Minuses may be costs associated with the Wyeth integration, as well as generic dilution of their name brands.
Pfizer Inc. is expected to release their Q310 earnings on Monday, November 2, 2010, at approximately 7:00am EDT. Stay tuned to StreetInsider.com's EPS Central section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
PFE is expected to report an EPS of $0.51 on revs of $16.69 billion. Last quarter, the New York, NY-based pharma reported an EPS of $0.62, ex-items, on revs of $17.33 billion, both besting views. Last year, in Q309, the Lipitor-maker posted an adjusted EPS of $0.51 on revs of $11.6 billion, both topping estimates.
Shares rose 22% through the quarter, to $17.17 at the end of September. The stock is up 3% since then, and down 3.6% on the year.
A simple valuation puts PFE at 7.7x FY11 EPS estimates, cheap compared to 9.6x for Merck (NYSE: MRK) and 10.9x for Novartis (NYSE: NVS). Pfizer's $0.18 quarterly dividend is also yielding 4.1% currently.
Data from Bloomberg has 20 analysts with a Buy, 5 with a Hold, and two putting a Sell on the stock. The analyst price target average is $20, with a high of $30, and a low of $17.
Analyst Ratings Through the Quarter
In July, Deutsche Bank cut their price target on the shares from $25 to $20, keeping their Buy rating. Deutsche cited "the low visibility of future revenue growth."
Summary
Going into earnings, J.P. Morgan notes that capital deployment at PFE is an underappreciated catalyst. Specifically, "With over $40 billion in post-dividend FCF expected over the next 5 years (2011-2015), we anticipate Pfizer will pursue a combination of increased dividend payment, share repurchases and business development with the later in particular representing a potential positive catalyst for the stock." They also see Pfizer as a less "cliff-exposed" pharma than before, which should translate to a more stable, multiple business going forward. Key pipeline updates to watch for include, "initial Phase III data for CP-690,550 (JAK-3) at ACR in November, the filing of Prevnar 13 adult (2H/10) as well as additional apixaban phase III data (ARISTOLE, 1H/2011)."
Other key items would be current sales of Lyrica, Enbrel, and Prenar vaccines. Minuses may be costs associated with the Wyeth integration, as well as generic dilution of their name brands.
Pfizer Inc. is expected to release their Q310 earnings on Monday, November 2, 2010, at approximately 7:00am EDT. Stay tuned to StreetInsider.com's EPS Central section to see our analysis of the highly-anticipated quarterly results within seconds of their release.
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