Pfizer's Stock Drops After Profit Outlook Cut

Pfizer's stock fell 1.6% in premarket trade Monday, after the blue-chip drug maker lowered its 2014 profit outlook following its agreement to team up with Germany's Merck KGaA to develop new cancer treatments. Pfizer now expects full-year earnings per share of $1.40 to $1.49, down from its previous guidance of $1.50 to $1.59. The outlook was cut because as part of the cancer treatment partnership, Pfizer will pay Merck KGaA an upfront payment of $850 million, and could pay milestone payments of up to $2 billion. Pfizer said the new earnings outlook doesn't reflect the impact of sharing future profit of Pfizer's Xalkori cancer treatment, which the companies will both promote in the U.S. Pfizer said that once it concludes its analysis of the profit exchange, the impact could reduce financial results by $250 million to $400 million. Pfizer's stock, a component of the Dow industrials, has lost 1% year to date through Friday, compared with a 6.4% gain in the Dow.