Earlier today Pfizer, Inc. (PFE) released fiscal Q1 2013 earnings that disappointed on all fronts. Despite an ongoing valuation increase, the company lowered their fiscal year outlook and per share earnings were partially inflated by aggressive share repurchases in light of unexpectedly slow sales.
As we pointed out with in our full analysis of Pfizer, the company remains in a highly compromised position. The challenges that we identified results from an overly aggressive cost containment effort that has impeded marketing and sales efforts
What's more the company disclosed that revenues benefited from further accounting measures involving asset transfers with their China-based joint venture.
Revenues of $13.50 billion disappointed relative to consensus estimates of $14.00 billion and our $14.35 billion projection by a fairly exaggerated 5.9%.
Quarterly underperformance was fairly comprehensive with nearly all business units failing to meet our conservative projections. Most concerning was the performance of; primary care (-11.3%), emerging markets (-8.7%), specialty (-5.6%) and established products (-4.0%). Conversely animal health / Zoetis and oncology were inline with our estimated for the quarter.
At the product level, several additional concerning trends emerge. Despite the overall weak results in total and for established products, Lipitor and Viagra performed above expectations. However, Lyrica was unable to maintain the momentum that was demonstrated in 4Q12 and missed our $1.125 billion estimate by 5.2%. Similarly, Prevnar sales missed by 19.4%, the Premarin family (-18.7%) and Celebrex (9.9%) also disappointed by significant variances as well.
The company was able to benefit from further cost containment efforts with all expense lines largely being inline with our projections on a percentage of revenue basis and below our absolute dollar estimates.
Pro forma earnings of $0.54 were two cents below the consensus $0.56 estimate and three cents below our $0.57 estimate respectively.
What did not come as an overly surprising announcement was the lowering of company estimate in only the first quarter since being initially provided. In what is typically a fairly damning maneuver, the company lowered their fiscal 2013 revenue guidance to a range of $55.3 - $57.3 billion. The revision now places our initially perceived overly pessimistic revenue projection of $56.275 billion estimate just below the midpoint of the company guided range.
However, given the breadth of the reported weakness we do not believe that Pfizer will be able to make up the revenue shortfall in 2H13 and believe that the company will need to lower their guidance again at some point in 2013.
At this point we are reiterating our fiscal Q2 revenue estimate of $14.15 billion and $0.59 adjusted diluted per share earnings estimate though we believe that some downside exists. Our figure are also aligned to the consensus figures of $14.39 billion in revenues and $0.59 adjusted EPS that have drifted down to our figures since we initially reported.