Pfizer Falters on Outlook

Shares in Pfizer Inc. (PFE, 27.07) are trading lower after the company reduced its full year outlook resulting from the expected loss of patent protection for Norvasc, its second best selling drug behind Lipitor.

The pharmaceutical giant reduced its earnings range to $2.08-$2.15, down from its previous expectations of $2.18-$2.25 and consensus estimates of $2.18. This is due principally to the earlier surprise patent loss of its hypertension drug, Norvasc. Revenues remain on target with expectations.

Pfizer reaffirmed FY08 guidance of $2.31-$2.45 per share indicating 13% earnings growth using mid range estimates. FY08 revenues are targeted at $46.5-$48.5 - in line with expectations.

The tempered guidance overshadowed an 11 cent beat in the first quarter, earning $0.68 per share, excluding non-recurring items, as Pifzer's restructuring efforts continued to yield results.

Total revenues were $12.4 billion, while adjusted gross margins were 85.9%. Lipitor sales were $3.36 billion (+8%), Norvasc $1.07 billion (-10%), Celebrex $598 million (+22%), Zyrtec $461 million (+10%) and Viagra $434 million (+11%).

Given its restructuring efforts, coupled with major setbacks in its pipeline including the sudden death of its new cholesterol treatment, Torcetrapib, in December, and ongoing industry challenges, we continue to think there will be a major strategic shift at Pfizer. We remain buyers on pull backs. The stock trades at 12.9x trailing and 12.3x forward earnings. PFE's dividend yield is 4.3%.

--Kimberly DuBord, Briefing.com