Pfizer tops Q4 Earnings estimates on Favorable Tax Reform

Pfizer Inc. (NYSE: PFE) reported its fourth quarter financial results and beat analysts’ estimates in earnings while revenue fell in-line. Pfizer shares were trading 3 percent lower on Tuesday after open.

For the fourth quarter, Pfizer reported revenue of $13.7 billion, up 1 percent year over year, and falling in line with analysts’ estimates. Pfizer reported an adjusted EPS of $0.62, up 32 percent year over year, and beating analysts’ estimates of $0.56.

Pfizer’s innovative health segment reported revenue of $8.2 billion, increasing 6 percent year over year. Pfizer’s essential health segment reported revenue of $5.5 billion, decreasing 7 percent year over year.

Innovative health segment was driven by continued growth from in its Eliquis, Xeljanz, and Prevenar 13 brands. Globally, Eliquis revenues increased 43 percent operationally year over year, while Xeljanz revenues increased 47 percent operationally. Prevenar 13 grew 7 percent year over year in revenue internationally.

Pfizer says it has benefited from the tax reform which cut corporate tax rates from 35 percent to 21 percent. The company has reportedly gained approximately $11 billion due to the tax reform.

For the full year, Pfizer reported revenue of $52.5 billion, decreasing 1 percent year over year. Pfizer reported an adjusted EPS of $2.65, increasing 11 percent year over year. Pfizer returned $12.7 billion to shareholders.

“Pfizer had a strong year in 2017, delivering solid financial results, advancing several significant pipeline programs and enhancing shareholder value with prudent capital allocation decisions.” said Ian Read, Chairman and Chief Executive Officer.

For 2018, Pfizer forecasts revenue between $53.5 billion and $55.5 billion and an adjusted EPS of $2.90 to $3.00. The company forecasts quarterly dividend payments of $0.34 per share in addition to $5 billion of share repurchases. Currently, Pfizer’s repurchase authorization is set at $16.4 billion for 2018.

Pfizer plans to increase its investments in the U.S. for a long term goal. Over the next five years, Pfizer plans to invest approximately $5 billion in capital projects in the U.S. to strengthen its manufacturing presence.

In the heat of mergers and acquisitions of pharmaceutical and biotech companies, Pfizer finds itself in a position to expand its portfolio. Companies such as Celgene Corporation was under pressure for acquisitions due to patents expiring for its drugs. Pfizer faces the same problem as Celgene.

Pfizer is reliant on its drugs that may have their patents expire shortly, which leds to investors pressuring the pharmaceutical company to acquiring another drug or a company as a whole. Especially with the favorable tax reform, Pfizer is definitely in a position to be able to acquire another drug maker in order to diversify its portfolio before its patents run out.

Read added, “I believe our current management and business structure, the tireless dedication of our colleagues and the strong culture we have nurtured position Pfizer especially well for continued success.”

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