Published July 30, 2013
Thanks to gains tied to asset sales, Pfizer (PFE) revealed surging second-quarter earnings on Tuesday that topped forecasts, although the drug giant’s sales shrank more than expected.
Shares of the largest U.S. pharmaceutical company inched higher following the earnings beat and management’s decision to reaffirm full-year guidance.
Pfizer said it earned $14.1 billion, or $1.98 a share, last quarter, compared with a profit of $3.25 billion, or 43 cents a share, a year earlier.
Excluding one-time items like the asset-sale benefits, it earned 59 cents a share, exceeding the Street’s view of 55 cents.
However, revenue dropped 7.1% to $12.97 billion, narrowly missing consensus calls from analyst for $13.01 billion. Pfizer blamed the sales slump on the loss of exclusivity of a number of drugs. Operating margins jumped to 41.3% from 29.9%.
The report comes just a day after Pfizer unveiled plans to separate its commercial operations into two units for patent-protected brands and a third for genetics.
“This new model represents the next step in Pfizer's journey to further revitalize our innovative core, enhance the value of our consumer and off-patent established brands and maximize the use of our capital to create value for Pfizer and our patients, consumers and shareholders,” Pfizer CEO Ian Read said in a statement.
Looking ahead, Pfizer said it stands by its prior call for non-GAAP EPS of $2.10 to $2.20 in 2012 on revenue of $50.8 billion to $52.8 billion. By comparison, analysts had been calling for EPS of $2.16 on sales of $52.4 billion.
Pfizer also said its board of directors signed off on a new $10 billion share repurchase program “to be utilized over time.” The new authorization is on top of the $3.1 billion remaining under a prior buyback plan. Pfizer said it bought back $3.3 billion of common stock during the second quarter.
A number of key drugs suffered year-over-year sales declines during the second quarter, including 3% drops for both Prevnar and Enbrel outside the U.S. and Canada. Pfizer also said its Lipitor sales plunged 55% to $545 million amid the loss of exclusivity contracts.
On the other hand, Pfizer said its Lyrica sales jumped 10% to $1.13 billion, while Celebrex sales increased 8% to $715 million.
Shares of New York-based Pfizer gained 0.51% to $29.69 ahead of Tuesday’s opening bell. Pfizer has rallied almost 18% so far this year.