Skip to Content
Stock Analyst Update

Pfizer Posts Slightly Weak Quarter, but Guidance Solid

Results for the wide-moat firm were slightly below expectations due to marketing expenditures.

Mentioned:

Pfizer (PFE) reported fourth-quarter results that were slightly below our expectations, partly due to higher-than-expected marketing expenditures, but we don’t expect any major changes to our fair value estimate based on the results. In the quarter, sales from new drugs mitigated the generic pressures facing the firm, leading to a 1% operational sales decline (excluding the shift of consumer products to a joint venture). This ability to offset generic pressures with new drugs helps reinforce Pfizer’s wide moat.

With the decision to divest its older drug platform (Upjohn) to Mylan, the remaining part of Pfizer should be positioned for stronger growth. Its 2020 guidance for the remaining innovative biopharma group is 8%, which is slightly higher than our projections but looks achievable. We expect strong growth from cardiovascular drug Eliquis and rare heart disease drug Vyndaqel, along with cancer drugs Ibrance, Braftovi, and Mektovi, to help achieve the guidance. We believe some of the heavy marketing expense in the quarter was supportive of these new drugs.

Looking ahead, Pfizer’s pipeline looks poised to deliver strong data in 2020. We expect positive data on Pfizer’s new pneumococcal vaccine that offers broader coverage relative to Pfizer’s Prevnar 13 and Merck’s competitive vaccine. Also, data readouts for Ibrance (early-stage breast cancer) and abrocitinib (atopic dermatitis) hold strong potential.

The divestment of the older drug platform removes the typical sales drag that Pfizer faces each year. The pressures on sales growth this quarter included generic competition for neurology drug Lyrica. With the shift of these drugs to Mylan expected in mid-2020, Pfizer’s new drug platform will not need to offset major patent losses in the near term. Further, while the combined platform of Mylan and Pfizer’s older drugs will face pressures to grow, the profit margin on Pfizer’s older drugs is very strong, enabling robust cash flows.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Damien Conover does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.