Pfizer (PFE, Financial) will release its first quarter 2014 earnings report before the opening bell on Monday, May 5, 2014. Since the company has posted higher than expected earnings over the past three quarters, analysts and investors are looking for the pharmaceutical giant to beat the Street’s estimates once again.
Previous Quarterly Performances
Pfizer’s EPS has exceeded analyst predictions by an average of 4.31% over the past three quarters.
| EPS | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 |
| Estimate | $0.55 | $0.52 | $0.56 | $0.55 |
| Actual | Ă‚ | $0.56 | $0.58 | $0.56 |
Revenue Growth Outlook
Pfizer’s revenue outlook is strong due to the growing sales of its current drug lines and the potential future profits found in the drugs currently moving through the development and testing stages. The company saw its profits increase due to the rising global demand for Lyrica, Celebrex and Xalkori, and increased U.S. demand for Xeljanz and Eliquis.
Pfizer currently has several drugs in its pipeline that recently received approval from the U.S. Food and Drug Administration: cancer drug Xalkori, menopause treatment drug Duavee and pain medication Embeda. Pfizer also has several drugs working through the testing phase including breast cancer treatment drug Palbociclib, heart drug Tafamidis and cholesterol drug Bococizumab. Both Pfizer and Merck (MRK, Financial) are currently collaborating to develop Type II diabetes drug Ertugliflozin. Pfizer is also collaborating with Eli Lilly (LLY, Financial) to develop pain medication Tanezumab.
Negative Revenue Factors
Pfizer saw a sharp decline in product revenue when the patent expired for cholesterol lowering drug Lipitor on Nov. 30, 2011 and the collaboration agreement for arthritis drug Enbrel expired on Oct. 31, 2013. The company will experience further revenue declines as drug patents expire in the future. In addition, unfavorable interest rates and currency exchange rates continue to negatively impact Pfizer’s profits.
Analysts Expectations
Analysts are looking for Pfizer to beat the Street’s estimates for the fourth consecutive quarter. The EPS estimates range from a low of $0.52 to a high of $0.59 with the target EPS pegged at $0.55. The estimated revenue ranges from a low of $11.8 billion to a high of $12.2 billion with a target of $12 billion. However, hitting the $12 billion target mark means that the company’s first quarter 2014 revenue declined by 11% when compared to the $13.5 billion quarterly revenue reported in fourth quarter 2013.
| Revenue | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 |
| Estimate | $12B | $13.4B | $12.7B | $13B |
| Actual | Ă‚ | $13.5B | $12.6B | $13B |
Trading the Earnings Report
On a scale of 0 to 10, analysts currently rate Pfizer as a hold at 5.4. Analysts at Thompson Reuters rate the stock as a buy while Zack’s Investment Research rates Pfizer as a hold. The stock price has bounced between $29.58 and $32.35 since April 14, 2014. Due to Pfizer’s current revenue growth and future income potential, taking a long position should be considered a long-term investment. Using Pfizer’s stock price of $30.79 as the pivot point, support and resistance can be pegged at these levels:
| Ă‚ | Support | Ă‚ | Resistance |
| S1 | $30.51 | R1 | $31.02 |
| S2 | $30.28 | R2 | $31.30 |
| S3 | $30.00 | R3 | $31.53 |
Analysts’ long-term stock target price is $38.00 a share.
Disclosure: I do not own stock in any of the companies included in this article and have no intention of opening a position in the next 72 hours.
