Summary
- Pfizer reported their fourth-quarter earnings for 2018 yesterday before the market opened, beating analyst expectations narrowly for both revenue and EPS.
- Poor guidance which fell below analyst expectations initially sent the stock down 2 percent, but shares quickly rebounded ending the day up by about 3%.
- The loss of patent protection for blockbusters Lyrica and Viagra is bad news, but Pfizer has weathered worse.
- I would look towards the future, Pfizer has a strong pipeline and positive catalysts in store for 2019.
- Pfizer anticipates buying back $9 billion dollars worth of shares all while making quarterly dividend payments of $0.36 in 2019.
Pfizer (PFE) reported fourth-quarter earnings for 2018 yesterday, beating analyst expectations for both quarterly revenues and earnings while missing guidance estimates. Shares reacted by falling 2% during premarket trading but slowly recovered throughout the rest of the day, ultimately ending up 3% by the end of the trading day. Attention following the earnings report has really only centered on Pfizer's guidance miss, which was largely due to the loss of patent protection for two of Pfizer's blockbuster drugs: Lyrica and Viagra.
Earnings per share (NYSEARCA:EPS) for the fourth quarter beat out the consensus analyst expectation by only a penny, coming in at $0.64. Quarterly revenue was $13.98 billion, slightly exceeding analyst forecasts of $13.90 billion. Both revenue and EPS remained relatively flat y/oy, rising 2% and 3% respectively from $13.7 billion and $0.62.
Although it's beyond unfortunate that Viagra lost it's patent protection and that Lyrica will soon follow, I remain bullish on Pfizer. The earnings guidance miss was unfortunate, but it doesn't matter in the long run. Lyrica losing it's patent protection in the United States later in the year doesn't really matter in the grand scheme of things either. Not only has Pfizer rolled out several new products to offset patent protection losses, but they have a strong and diverse pipeline which will power returns in the future. Biosimilar growth was exceptionally strong with more planned launches in the near future. Pfizer's new joint consumer healthcare venture with GlaxoSmithKline (GSK) is a very creative way to create shareholder value too. I think this type of thinking alone demonstrates that Pfizer has a proactive managment which understands what it needs to do to make sure 2019 is as great as 2018 was.
