Updated from 8:13 a.m. EDTPfizer ( PFE) on Tuesday reported first-quarter financial results that topped Wall Street earnings estimates but fell slightly below the consensus view for revenue. The earnings performance exceeded analysts' consensus for the sixth consecutive quarter. Calling the first quarter a "strong platform for growth," David Shedlarz, executive vice president and chief financial officer, said Pfizer was reiterating its full-year financial guidance of about $54 billion in revenue and net earnings -- excluding special charges -- of $16.3 billion, or $2.13 a share. Two investment banking firms issuing early reports -- Morgan Stanley and Credit Suisse First Boston -- used the same headline ("Solid First Quarter") to describe Pfizer's performance. For the first quarter, the company earned $3.98 billion, or 52 cents, on revenue of $12.49 billion. The consensus view according to Thomson First Call was net earnings of $3.86 billion, or 51 cents a share, on sales of $12.65 billion. For the same period last year, Pfizer earned $2.5 billion, or 41 cents a share, on revenue of $8.51 billion excluding one-time charges. The above comparisons reflect what the company calls adjusted income and adjusted earnings per share that exclude discontinued operations, changes in accounting principles, acquisitions, merger costs and "certain significant items." Comparisons between the first quarters of 2004 and 2003 -- and the accounting of them -- were affected by Pfizer's acquisitions of Pharmacia and Esperion Therapeutics and the purchase of two animal health care businesses. Without the above adjustments, Pfizer reported a 2004 first-quarter net income of $2.33 billion, or 30 cents a share, compared to last year's first quarter net income of $4.67 billion, or 76 cents a share. Karen Katen, executive vice president of the company and president of Pfizer Global Pharmaceuticals, pointed out that 11 Pfizer drugs each produced sales of more than $250 million during the first quarter.
The world's bestselling drug, the cholesterol fighter Lipitor, recorded first-quarter sales of $2.5 billion, up 19 percent. Quarterly sales of Norvasc, the fourth-largest-selling drug in the world as well as the bestselling high blood pressure medication, grew 16 percent to $1.14 billion. "Four of the world's 11 best-selling medicines are marketed by Pfizer, and 14 of our medicines lead their therapeutic areas," Katen said. However, some big brand names didn't do well. Sales of the antibiotic Zithromax dropped 15% to $446 million. The impotence drug Viagra recorded a 12% worldwide sales decline to $416 million, with the U.S. market posting a 25% drop to $220 million. (
For more on Viagra sales, click here.) Two new competitors - introduced last August and November - have begun taking a bigger piece of market share. Ken Kulju, of Credit Suisse First Boston, told clients Tuesday that he was impressed by the stronger-than-expected synergy of the Pharmacia deal as well as with administrative expenses and research and development expenses that fell below his estimates. Operating margins were above his forecast. Kulju, who has an outperform rating on the stock, said sales of Lipitor, Norvasc and several other key products either surpassed or matched his predictions. However, sales of Viagra and Zithromax fell below his estimates (He doesn't own shares; his firm has had an investment banking relationship with Pfizer in the last 12 months). "Overall, the performance was solid across the board," said Jami Rubin, of Morgan Stanley, in an early Tuesday research note. Rubin, who has an overweight rating on Pfizer, said she was pleasantly surprised by strong sales from Lipitor, Norvasc and the anti-inflammatory drug Celebrex. She also was disappointed by sales of Viagra and Zithromax. With the prospect of four new products reaching the U.S. market this year, the possibility of four new drug review applications being sent to the Food and Drug Administration, and "a slew of advanced stage projects moving down the development pike," Rubin likes the look of Pfizer's future. The company "is shifting from a defensive cost-cutting story to a new product story," she said. (Rubin doesn't own shares; her firm has had an investment banking relationship with Pfizer in the last 12 months).
Merrill Lynch analyst David R. Risinger, who has a buy recommendation, told clients Tuesday that he was raising his full year EPS estimate to $2.13 -- in line with company guidance -- from $2.06. Risinger said his action reflects a belief that the epilepsy drug Neurontin will be attacked by generic competition later rather than sooner. Pfizer is fighting in court over a patent challenge by Ivax ( IVX). Risinger had been predicting generic competition by this July, but he said the legal process is moving slowly enough for him to now forecast that a generic drug won't be available until early next year. (He doesn't own shares; his firm has had an investment banking relationship with Pfizer in the last 12 months). Neurontin produced $2.7 billion in worldwide sales -- including $2.2 billion in the U.S. -- last year. For the first quarter of 2004, Neurontin's worldwide sales rose 12% to $696 million, with the U.S. component gaining 9% to $570 million. Pfizer's stock was down 48 cents, or 1.3%, to $37.10.