On Tuesday morning, Pfizer (PFE) reported the firm's third quarter financial results. For the three month period, Pfizer posted adjusted EPS of $1.34, and GAAP EPS of $1.42. By either metric, Pfizer crushed Wall Street's expectations for profitability. Revenue generation amounted to $24.1 billion, again... besting consensus view by well more than $1 billion. This performance adds up to earnings growth of 86.1% on revenue growth of 134.1%.
Over the reporting period, Pfizer attributed sales of Comirnaty, the firm's Covid-19 Messenger RNA vaccine co-developed with BioNTech (BNTX) , for the size of the top and bottom line beats as this jab generated about $13 billion in direct sales and alliance revenues. Ex-Comirnaty sales increased just 7% to $11.1 billion.
Breakdown
Pfizer breaks out sales for six different business lines. The largest of those lines pre-pandemic had been Oncology, with Vaccines a distant fourth. Vaccines have obviously seen a tremendous boost in sales due to the COVID-19 vaccine, Comirnaty. Vaccine sales increased 749% to $14.583 billion. Oncology, by the way, experienced a 12% pop to $3.085 billion. Hospitals saw revenue growth of 32% to $2.367 billion. Now, the sledding gets a little tougher. Internal Medicine sales grew 1% to $2.097 billion, while Inflammation & Immunology saw a 7% contraction to $1.094 billion, and the firm's smallest business, Rare Diseases saw an increase of 16% to $869 million.
The flipside of this was the huge increase to the cost of sales. In dollar terms, this cost increased from $2.007 billion to $9.973 billion. As a percentage of sales, the cost of sales gapped from 19.5% to 41.4%. Most of this increase was associated with sales of Comirnaty.
Progress
In September, results from a Phase 2/3 study of BNT-162b2 (Comirnaty) showed favorable safety and efficacy results in children aged 5 through 11 years. The FDA authorized BNT-162b2 for this age group last week. The CDC needs to green light the idea before immunizing children can proceed. The CDC's advisory committee meets Tuesday (today), November 2nd, with a formal response expected tomorrow (Wednesday).
In August, the firm announced that JAFE DARE (B7451050) indicated for severe atopic dermatitis, had met its co-primary and key secondary efficacy endpoints in a Phase 3 clinical trial.
Further down in the pipeline, Pfizer has announced the dosing of the first patients in a Phase 1 clinical trial to evaluate the safety, tolerability and immunology of a single dose mRNA vaccine against influenza in healthy adults.
Outlook
Pfizer increased full year 2021 revenue guidance to $81 billion to $82 billion from the previous guidance of $78 billion to $80 billion. The firm also increased expectations for full year adjusted EPS to a range of $4.13 to $4.18., from a range of $3.95 to $4.05. Wall Street had been at $81.56 billion and $4.06 on these metrics. The new midpoints would reflect earnings growth of 94% on revenue growth of 84%. The firm anticipates 2021 sales of Comirnaty to reach $36 billion, reflecting delivery of 2.3 billion doses. The firm sees adjusted non-Comirnaty EPS of $2.60 to $2.65.
The Chart
The interesting thing about this chart is that the stock has underperformed its sales growth for months now, yet the shares are close to being short-term overbought. There is an underlying upward sloping trendline that goes back to August that needs to hold in order for nothing to break. That said, the shares have taken their 50 day SMA this morning after using their 21 day EMA as support since mid-October.
There was a small gap created on Tuesday morning that has already been filled. I would prefer to see another run at that 50 day line, perhaps on some CDC news. Until then, this is a low-beat, dividend stock that I don't mind at all keeping in my portfolio. I am going to use that 50 day SMA ($44) as a pivot, which makes the price target $52.
A patient investor could purchase some equity right here, and if the intention is to scale the stock in as one adds, then sell (write) January 21st 2022 $41 puts for about $1. That same investor could then purchase January 2st $47 calls for roughly that same dollar, taking the decision making out of the equation. Either the investor pays $42 on weakness or pays $47 on momentum. Should the shares stay between $41 and $47 though January? No harm, no foul.
