Pharmaceutical giant Pfizer Inc. (NYSE: PFE) reported lower-than-anticipated fiscal 2018 first-quarter revenue as demand for some of its main drugs and global sales fell short of analysts’ estimates. This triggered a sell-off in the stock of the largest drug maker in the US. Considering the headwinds faced by the company and below-par results, we are expecting the stock to slide further in the days to come. The stock of Pfizer ended Wednesday’s trading session at $34.89.
The Viagra manufacturer reported 1Q18 earnings of $3.561 billion, or $0.59 per share, on revenues of $12.91 billion. In the same period last year, the New York-based company reported earnings of $3.121 billion, or $0.51 per share, on revenues of $12.78 billion.
Excluding items, adjusted income for the quarter ended March 2018 was $4.668 billion, or $0.77 per share, compared with $4.192 billion, or $0.69 per share in the prior year similar period. The Street analysts had expected the company to earn $0.74 per share on revenues of $13.31 billion. Higher-than-expected sales of pneumonia vaccine Prevnar enabled the company to beat earnings estimates of analysts.
Ibrance generated sales of $933 million in the recent quarter, up 37.4% on a y-o-y basis, but below analysts’ estimates of $956.60 million. Likewise, Xeljanz, approved to treat rheumatoid arthritis and psoriatic arthritis, reported sales of $326 million and missed analysts’ expectations of $398.50 million.
Prevnar raked in sales of $1.38 billion and exceeded analysts’ expectations by a small margin. Enbrel, an injected arthritis drug, saw its sales plummet 14% to $506 million, mainly due to competition from cheaper biosimilars outside the US. Vaccines and other drugs such as Lyrica, Celebrex, and Premarin also posted lower than anticipated sales.
Pfizer stated that it has 15 potential blockbuster medicines in the product pipeline, with a possible launch by 2022. The company also sees significant opportunities to expand sales of prostate cancer drug Xtandi and arthritis drug Xeljanz for ulcerative colitis.
Pfizer has been exploring the sale of its consumer healthcare business but is yet to receive an acceptable bid. Over the past few years, the company has been largely unsuccessful in its attempt to pull off a big merger or acquisition deal. Pfizer’s merger deal with Allergan failed in 2016.
The company’s CEO Ian Read insists that it is not looking for any big merger or acquisition deals. In fact, Read believes the drugs which are currently in development will drive future growth. However, analysts do not subscribe to that view. To strengthen their argument, analysts point that the company could have missed estimates by a wide margin if the currency tailwinds were not present. Therefore, fundamentally, the stock is expected to remain bearish in the short-term.
Pfizer still expects to post earnings of between $2.90 and $3.00 per share on revenues ranging from $53.50 billion to $55.50 billion. Analysts were disappointed by the lack of an upward revision of FY18 EPS and revenue guidance as the company’s competitors, Merck & Co (MRK) and AbbVie have raised their outlook after reporting their first-quarter results.
The price chart indicates that the stock has started declining after facing resistance at 37 levels. The oscillator of the moving average has turned negative. Furthermore, the next major support exists only at 32 levels. So, we are expecting the stock to remain on a bearish note.
Investing in a put option contract may enable us to gain from the current decline in the stock price. We may acquire a put option contract from a binary broker only if the stock of Pfizer is trading near $35 in the NYSE. Additionally, we wish the contract to expire on or around May 11th.
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