Pfizer Beats On Profits Through Aggressive Cost Cutting

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Pfizer (PFE) posted an EPS of $0.62 on revenues of just under $12B, which was two cents ahead of consensus earnings estimates and in-line with revenue estimates for the quarter. The company raised its full-year revenue view to $48-$49B while narrowing its earnings estimate to a range of $2.36-$2.41 per share.

Pfizer also raised its 2008 cost reduction target to at least $2B. International sales posted gains of 13% (mainly due to a currency exchange benefit of 10%) compared to a decline in U.S. revenues of 15% from the year-ago period.

Sales trends of key drugs during 3Q08 included a 1% decline for Lipitor to $3.1B, an 8% increase for Celebrex to $625M, a 49% increase for Sutent to $226M, a 24% decrease for Chantix to $182M, and a 45% increase for Lyrica to $675M. Overall drug sales totaled 11B for the quarter, which represented a 1% decline from the year-ago period and includes a favorable impact of 5% from foreign currency exchange.

 

Animal health revenues posted an increase of 11% from the prior year to $708M. Pfizer provided guidance for $17-$18B in cash flow from operations for 2008 versus $13.4B in the prior year.

Although overall drug sales growth is not robust and generic competition looms for key products such as Lipitor, Pfizer's strong cash flow--over $26B in cash--and an aggressive cost cutting campaign, make the stock a buy as a value play and turnaround candidate which can buy itself a pipeline of new drugs through targeted biotech and pharma acquisitions.

Comments

[john s. gordon:]

sold my PFE a while back, the balance sheet has tons of cash but mgmt doesn't seem to know what to do with it. special dividend to the stockholders maybe ?
> jack

2008 Oct 22 09:05 AM