By Brendan Gilmartin
Pfizer (PFE) is scheduled to report Q3 2012 earnings before the opening bell on Tuesday, Oct. 30. The shares recently climbed to a multiyear peak close to $26, the highest level in close to five years. The numbers are typically released at 7:00 a.m. ET and could influence the broader market indices, including the Dow and S&P Index Futures.
The consensus for adjusted earnings per share is $0.53, the midway point of analyst forecasts ($0.49 to $0.57). In order for Pfizer shares to push higher in reaction to earnings, look for adjusted EPS to come in >$0.57. Results tend to closely mirror analyst estimates and a delta of $0.04 would be the minimum needed to push the shares higher. If earnings were to come in <$0.53, Pfizer faces steep downside risk, given the recent run-up in the shares. (Source: Yahoo Finance.)
- Revenues: Revenues are seen falling 14.9% to $14.64 bln.
- Adjusted EPS Guidance (FY 2012): Look for any updates to the previously issued outlook for $2.14 to $2.24. The consensus is currently at $2.21. Based on recent price action and the shares near a five-year high, many are looking for Pfizer to perhaps raise this outlook.
- Revenues Guidance (FY 2012): Pfizer previously indicated it expects revenues in the range of $58.0 billion to $60.0 billion.
Pfizer shares are up nearly 40% over the course of the past year and within 2% of the 52-week high, but trades at just 11 times forward earnings, a discount to the S&P 500 and implies more upside toward the average price target of $27.67.
- Oct. 25: Pfizer declared a $0.22 quarterly dividend, bringing the yield to 3.44%, making it among the top payers in the S&P 500.
- Oct. 5: MKM Partners raised the price target on Pfizer from $27 to $29 and maintained a Buy rating, according to a post on StreetInsider.com. The firm cited valuation for the positive viewpoint.
- Sept. 5: According to an upbeat report in Barron's, Pfizer not only boasts a strong dividend yields , but a robust pipeline that should help the company beat earnings expectations and lift the shares to around $30 by the end of the year. The article also points out that Pfizer shares remain cheap from a valuation perspective, while streamlining operations and divesting underperforming segments. An aggressive share repurchase program also supports a bullish scenario.
Pfizer shares recently rallied to a 52-week high of $26.02 on Oct. 18 -- its best level in close to five years. The shares are also up more than 20% since early June. In the past several weeks, however, the shares have paused, while the momentum oscillators -- the MACD and RSI have leveled off ahead of the Q3 earnings release. Should earnings surprise to the upside, look for initial resistance at $26.00, while support is at $25.00, followed by the 50-day SMA near $24.50.
Pfizer shares have been rallying over the past several months, touching a five-year high earlier this month, as the company returns money to shareholders through a rich dividend (3.44%) and a robust share buyback program. Pfizer also boasts one of the more attractive drug pipelines in the industry, while the company continues to implement mass restructuring efforts designed to streamline the entire organization. Against this positive backdrop, Pfizer is vulnerable to any missteps. Therefore, look for earnings and revenues above estimates and the company to reiterate guidance in order to lift the shares back toward the recent high.
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