Pfizer's Forecast Disappoints

Updated from 10:23 a.m. EST

Pfizer (PFE) said Friday that 2006 will yield flat sales and slightly lower earnings per share, but the drug giant indicated that its top-line growth should resume in 2007 as new drugs more than offset the loss of patents on its existing medications.

The company is looking for what it calls an adjusted profit of about $2 a share this year, excluding items, or $1.52 to $1.56 when calculated using generally accepted accounting principles. Pfizer's projection that revenue in 2006 will be "comparable" to last year implies overall sales of about $51.3 billion. The consensus Wall Street estimate is just under $51.6 billion.

On average, analysts surveyed by Thomson First Call were looking for an adjusted profit of $2.04 a share this year. In 2005, Pfizer earned $2.02 a share, before items. GAAP earnings were $1.09 a share last year.

Pfizer also forecast "high single-digit average annual growth" in 2007-2008 adusted earnings per share. Depending on how you define "high single digits," Pfizer's EPS estimates for the next two years, excluding items, appear to fall below the consensus forecasts of $2.16 in 2007 and $2.30 for 2008. Pfizer's earnings estimates include its consumer-products business, which the company said earlier this week would be evaluated for a spinoff, sale or perhaps retention.

"Over the next three years, a new generation Pfizer will emerge, and our company will have the operating and financial strength to sustain value," said Hank McKinnell, the chairman and CEO. "We are taking a fresh look at everything we do."

Adding that Pfizer's transformation won't happen overnight, McKinnell said his company's goal is to "play our best game better" as well as to "change the game."

Investors weren't terribly happy with what they heard. By early afternoon, the stock was down 39 cents, or 2.5%, to $25.95. The stock fell as low as $25.35 in heavy trading.