NEW YORK (TheStreet) -- Another quarter is in the books for drug giant Pfizer (PFE) and it seems management has healed anxieties about the company's ability to innovate and return value back to shareholders following its spinoff of Zoetis (ZTS) earlier this year.
Although the decision to spin off Zoetis was -- in my opinion -- well thought out, the Street's concerns, which emerged amid a reduction in management's revenue forecasts, were not unfounded especially when Pfizer called for a decline in both earnings-per-share and operating income.
Although management did its best to explain the reason for the guidedown, which included contributions from Zoetis, analysts weren't satisfied. But following a better-than-expected third quarter, which beat the consensus estimate, Pfizer has also cured fears of an eroding pipeline. Investors are now debating whether they should buy into this breakout, which the stock has suddenly enjoyed, or calm their nerves for a better entry point.
First, let's realize that unlike the July quarter, during which management was criticized for "beating" earnings solely due to its cost-cutting measures, I doubt such tone is warranted this time around. Some investors still balked at the fact that revenue did decline again this quarter by 2% to $12.6 billion. Even so, we have to credit management for the strong sequential improvement from the 6% decline in the July quarter.
Not to mention, Pfizer's performance significantly outperformed the likes of GlaxoSmithKline (GSK) and Merck (MRK), the latter of which recently posted 4% revenue decline. And when digging deeper into Pfizer's segmental performance, it was clear that although Pfizer has not fully remedied its near-term growth struggles, let's appreciate that management is executing on its long-term vision.