Pfizer Needs Big Earnings Beat

NEW YORK ( TheStreet) -- Falling earnings don't make for a strong stock; however, Pfizer's (PFE) shares have continued to move higher.

Who They Are: Pfizer is a research-based, global pharmaceutical company that trades an average of 56.4 million shares per day with a marketcap of $175 billion.

Pfizer is forecast to record lackluster second-quarter earnings before the market opens on July 31. The consensus estimate is currently 55 cents a share, a fall of 5 cents (8.3%) from 60 cents during the equivalent quarter last year.

Fifteen out of 17 analysts covering the stock (over 70%) rate Pfizer a buy or strong buy. The company has two holds, and not one sell rating. The stock has appreciated 19.1% in the last year, and the average analyst target price for PFE is $25.58.

May 1 was the last earnings release with a closing price of $22.78, compared to a current price of $23.33. (Read a recent bullish article including Pfizer Are Elan, Pfizer, Lilly and J&J Buys After a Failed Drug Test? )

Management is executing with an increase of year-over-year revenue. Revenue reported was $67.43 billion last fiscal year compared to $67.06 billion in the previous year. The bottom line has rising earnings year-over-year of $10.01 billion last fiscal year compared to $8.26 billion in the previous year.

PFE beat earnings in all four of the last four quarters, with an average beat of 3 cents (5.56%) per share.

PFE PE Ratio Chart PFE PE Ratio data by YCharts

Industry and peer comparisons of companies that report before Pfizer:

Johnson & Johnson ( JNJ) recently beat earnings by a penny with $1.30 EPS. Wall Street wasn't pleased and shares have fallen about $2 a share to trade near $67.50.

Analysts as a whole like this company. Currently, J&J has 15 buy recommendations out of 23 analysts covering the company, eight holds and zero sell ratings. Over half the analysts covering J&J rate it as a buy or a strong buy.

J&J has appreciated 2.2% in the last year, and the average analyst target price for J&J is $74.60. J&J has a sizeable short interest of 9.5%.

Over half the analysts covering JNJ rate it as a buy or strong buy; 15 of the 23 analysts covering the company give a buy recommendation. Eight analysts rate it a hold, and none of the analysts recommend selling. The stock has appreciated 2.2% in the last year and the average analyst target price for JNJ is $74.60.

Bristol Myers Squibb ( BMY) reported in line earnings and as expected, volatility and volume were uneventful. Bristol did fall a relative amount after J&J reported though.

Bristol Myers Squibb has appreciated 19.6% in the last year, and the average analyst target price for BMY is $35.19. The last date Bristol Myers Squibb released earnings was April 26, and the closing price before earnings was $33.76. Based on a recent price of $35.05, shares are down 6.2%.

The short interest is relatively low at 2.23%. Revenue reported was $21.24 billion last fiscal year compared to $19.48 billion in the previous year. The bottom line has rising earnings year-over-year of $3.71 billion last fiscal year compared to $3.10 billion in the previous year.

Merck ( MRK) reports July 27, with an estimated EPS of $1.01, about 6 cents above last year during the same period. Last quarter, Merck's earnings release was held on April 27, and the previous closing price was $38.46. Relative to a current price of $42.74, shares are down 12.5%.

Over half the analysts covering Merck rate it as a buy or a strong buy. Twelve of the 18 analysts covering the company give a buy recommendation. Six analysts rate it a hold, and none of the analysts recommend selling.

Merck has appreciated 19.3% in the last year, and the average analyst target price for Merck is $44.75. The short interest is relatively low at 0.77%.

Gilead Sciences ( GILD) reports July 26, 2012 with an estimated EPS of 92 cents. This is a drop of about 8 cents from the same period last year.

The consensus estimate is currently 92 cents a share, a fall of 3 cents (3.2%) from 95 cents during the equivalent quarter last year. TheStreet's Jim Cramer writes about loss acceptance and Pfizer We're in Loss-Acceptance Mode (You need a Real Money Pro account to read, but Cramer's analysis makes it worthwhile.)

The mixed results of the comparisons coupled with the recent weakness in price suggest expectations are low enough that anything other than a large miss will be brushed off by the market. All the moving averages are moving higher in great trend-following strength. Top 5 Must-Follow Earnings for Monday

At the time of publication, the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.