Updated from 8:01 a.m. EDTDrugmaker Wyeth ( WYE ) beat analysts' first-quarter earnings estimates, as the weak dollar helped drive a 9% gain in revenue. The Madison, N.J.-based company posted a profit of $749.7 million, or 56 cents a share, on revenue of $4 billion in the quarter ended March 31, compared with $1.28 billion, or 96 cents a share, on revenue of $3.69 billion a year ago. But excluding items, the company had a net income of $844.3 million, or 63 cents a share, vs. $719.2 million, or 54 cents a share, in the year-ago period. The consensus forecast by analysts was for a profit of $736.2 million, or 55 cents a share, on sales of $3.94 billion. The news boosted the company's stock. By late morning, shares had advanced $1.07, or 2.7%, to $40.07. First-quarter 2004 results included an after-tax charge of $94.6 million, or 7 cents a share, related to a payment to Solvay Pharmaceuticals of Belgium for a codevelopment and marketing agreement. In contrast, first-quarter 2003 results included an after-tax gain of $558.7 million, or 42 cents a share, from the sale of Wyeth's stock in Amgen ( AMGN ). Excluding the impact of foreign exchange benefits, revenue rose 4% during the quarter. Wyeth also reaffirmed full-year guidance of $2.60 to $2.70 a share, excluding items, vs. a consensus estimate of $2.62. "As significant as the growth we achieved with our marketed products is, we are making progress in our development pipeline, augmented by inlicensing opportunities, such as our recent agreement with Solvay," the company said in a statement. "Overall, we are pleased with the with the quarter, which reflected better than expected performance among multiple product lines," said Jami Rubin, of Morgan Stanley, in a Wednesday morning research note. Rubin, who has an overweight rating on the stock, said the first-quarter results "will add to investors' confidence level in the company's ability to hit its guidance this year." (She doesn't own shares; her firm has had an investment banking relationship in the past 12 months.)
Another favorable response came from David R. Risinger of Merrill Lynch, who reiterated a buy recommendation. He said in a Wednesday research note that Wyeth's EPS growth rate prospects are better than those of its peer group -- high single-digit growth for Wyeth vs. mid single-digit growth for other Big Pharma companies through 2007. (He doesn't own shares; his firm is a market maker in Wyeth's stock and has had an investment banking relationship in the last 12 months.) A more cautious view comes from Barbara Ryan of Deutsche Bank Securities, who dropped her rating to hold from buy in January and maintained her hold rating Wednesday. Although shares are "probably poised for a bounce due to the strength of the product outlook," Ryan told clients Wednesday that she believes the stock will only go as high as the mid-$40 range for the near-term. (She doesn't own shares; her firm says it expects to receive or seek investment banking compensation in the next three months). In the past 52 weeks, Wyeth's stock has been as high as $49.95 and as low as $35.03. One unresolved item for Wyeth is the future of its partnership with MedImmune ( MEDI) for marketing FluMist, the inhaled flu vaccine. FluMist, launched last year, was a profound disappointment as it failed to meet sales expectations. FluMist
means more to MedImmune than it does to Wyeth, but both companies have said little about their relationship. Many analysts believe Wyeth and MedImmune will part ways. Wyeth's actions spoke louder than words last month when it said it was closing a plant in Marietta, Pa. by year-end. The plant has been focusing on vaccines, including a second-generation version of FluMist. At the time, Wyeth's formal announcement didn't even mention the experimental vaccine or MedImmune by name. "Wyeth's business partner will conduct future commercial production of this vaccine," the company said. On Wednesday, Wyeth didn't say anything about FluMist in its earnings announcement. Gaithersburg, Md.-based MedImmune wasn't very talkative, either. "As discussed in MedImmune's March 1, 2004 guidance press release, discussions are ongoing with Wyeth regarding their continued role, if any, in the development and commercialization of FluMist," MedImmune said in its first-quarter earnings release. "Further information will be provided when discussions are concluded." Wyeth's first quarter was paced by strong revenue growth among several veteran and new products: the antidepressant Effexor had worldwide sales of $776 million, up 31% from the same period last year; Protonix, for severe heartburn, gained 14% to $411 million; Zosyn, an injectable antibiotic, advanced 30% to $181 million; and Rapamune, a new organ transplant drug, grew 31% to $58 million. Sales of Prevnar, a vaccine for invasive pneumococcal disease, fell 24% to $173 million due to the late 2003 closing of a plant for improvements. The plant has resumed operations and Prevnar also is being made by another company temporarily. "Supply will be constrained at least through mid-year," Wyeth said. Revenue for the Premarin family of medications for menopause sank by 34% to $266 million. Wyeth said the sales were consistent with the fourth quarter of 2003, suggesting that stability had returned to this intensely competitive business.