Pfizer (PFE - Analyst Report) reported earnings Tuesday Morning and posted stronger than expected quarterly results, helped by growing sales of its cancer drugs and increase in demand in emerging markets.  After recent failed attempts of acquiring AstraZeneca (AZN - Analyst Report) and eventually cutting their losses and moving away from the $118 billion deal, there was no signal of any acquisition plans to buy the British drugmaker.

Pfizer is currently trading up .33% on the positive earnings reports and is up about 3% in the past week.

The largest U.S. drugmaker on Tuesday reported third-quarter revenue of $12.4 billion, beating analyst expectations by 1.97%. Pfizer reported adjusted earnings of 57 cents per share, beating analyst expectations by 1 cent of an expected 56 cents per share.   Consensus estimates have been in the range of 53 to 56 cents per share and actual reported earnings have been in the range of 54 to 57 cents per share since March 2013.

In comparison to the same period last year, reported revenue, adjusted net income & EPS were all down -2%, -5%, and -2% respectively. This could be attributed to the increased generic competition and the expiration of a longstanding deal with Amgen Inc (AMGN - Analyst Report) to co-market its Enbrel arthritis drug.   In the nine months of 2014, revenue and adjusted income were both down -4%, but adjusted EPS is up 4%.



Cost of sales increased 3%, but YTD has decreased 1%.  The biggest jump in Cost and expenses was R&D which jumped 10% since last year and 7% for the year.

Quarterly Highlights

The decrease in revenue of $281 million since last year reflected an operational decline of $270 million.  The operational decline was primarily due to the expiration of the co-promotion agreement for Enbrel in the U.S and Canada with Spiriva.

Revenues in developed markets were favorably impacted by the growth of certain key products, including Lyrica, Prevnar, Eliquis, Xeljanz, Xalkori, Inlyta, as well as Nexium 24HR primarily in the U.S. Additionally, revenues in emerging markets increased 9% operationally, including strong operational growth from Prevenar as well as from Lipitor, primarily in China.
 
Ian Read, Chairman and Chief Executive Officer, stated, “Our key in-line products continued to perform well with our most recent product launches exhibiting further momentum during the quarter. We also generated solid revenue growth in emerging markets and see these geographies as continuing to offer attractive growth opportunities for the company.”

He continued,

“Regarding our development pipeline, we were pleased that the U.S. Food and Drug Administration (FDA) accepted our breast cancer compound, palbociclib, for review and also granted it Priority Review status. We believe palbociclib may represent a significant advancement for the treatment of women with advanced breast cancer.”

“Within our Vaccines business, we received a positive recommendation from the U.S. Centers for Disease Control and Prevention’s (CDC) Advisory Committee on Immunization Practices (ACIP) for the use of Prevnar 13 in adults aged 65 and over while our marketing application for our meningitis B vaccine candidate, to be branded Trumenba, is under regulatory review in the U.S. with Priority Review status. In addition, we announced that our vaccine candidate in development for C. difficile was granted Fast Track designation by the FDA.”

Pipeline Developments

• Palbociclib (PD-0332991)

Pfizer announced in October that the FDA accepted for filing Pfizer's New Drug Application (NDA) with Priority Review seeking approval for palbociclib, in combination with letrozole, as a first-line treatment for women with estrogen problems, human epidermal growth, and advanced breast cancer.

This product that was approved by the European Commission in July approved Eliquis for the treatment of deep vein thrombosis (DVT) and pulmonary embolism (PE), and the prevention of recurrent DVT and PE in adults. 
The FDA’s Priority Review designation accelerates the review time from 10 months to a goal of six months from the day of filing.

• rLP2086 

The BLA seeks approval for the prevention of invasive meningococcal disease caused by Neisseria meningitidis serogroup B in adolescents and young adults (ages 10-25). The PDUFA (Deadline for FDA to approve new drugs) date for this BLA is February 14, 2015.

• Bococizumab 

Pfizer and Kyowa Hakko Kirin’s potential therapy  suppresses some of the immune cells that shield the tumor from the immune system, in a Phase 1b clinical study evaluating the safety and tolerability of the combination in patients with solid tumors.  This study is expected to begin in 2015 and the results will determine the future clinical development of the combination.

• PF-06425090

Currently in Phase 2 clinical development, the vaccine candidate is designed to prevent C. difficile-associated disease, which can include life-threatening diarrhea and pseudomembranous colitis.

• PF-06290510

Vaccine candidate, PF-06290510, currently in Phase 2 clinical trials, was granted Fast Track designation by the FDA in February 2014.

• Remoxy

Pfizer has decided to discontinue its agreement to develop and commercialize Remoxy, an investigational extended-release oral formulation of oxycodone. Pfizer will return all rights, including responsibility for regulatory activities, to Pain Therapeutics, Inc.

Corporate Developments

Pfizer announced in July that it has entered into a definitive agreement to acquire Baxter International Inc.'s (Baxter) portfolio of marketed vaccines for $635 million and is expected to be completed by the end of 2014.
In September, Pfizer completed its acquisition of the pharmaceutical development company, InnoPharma, Inc. for an upfront cash payment of $225 million and up to $135 million of contingent milestone payments.

2014 Financial Guidance
 

 
Bottom Line

We currently rank this pharmaceutical stock as a Zacks Rank #3 (hold), and consensus estimates for fourth quarter earnings is 54 cents per share. For the current quarter, the consensus estimate is 56 cents per share, representing a net decrease of 4.31% in YoY growth expectations. Pfizer has had a negative surprise in the revenue front, disappointing revenue projects by an average of -$150 million since March 2013. 

But Pfizer has beat earnings estimates by an average surprise of 4.11% in the past year and this quarter barely adding to the high end of the range.  Pfizer is the U.S’s largest drugmaker and investors should be on the lookout for any more potential acquisitions that will grow value for shareholders in the near term.