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What's Driving Pfizer’s Valuation after 2Q17 Earnings

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Part 4
What's Driving Pfizer’s Valuation after 2Q17 Earnings PART 4 OF 8

Understanding Pfizer’s Geographical Performance in 2Q17

Geographical performance

As we discussed earlier in this series, Pfizer (PFE) reported a 2% decline in revenues to $12.89 billion in 2Q17, compared to revenues of $13.15 billion in 2Q16. The company reported nearly flat revenues from US markets as well as nearly flat revenues at constant exchange rates for international markets in 2Q17.

Understanding Pfizer&#8217;s Geographical Performance in 2Q17

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Overall, Pfizer’s revenues were nearly flat at the operational level, offset by a 2% negative impact of foreign exchange in 2Q17.

Performance in the US markets

Revenues from US markets fell marginally to $6,345 million in 2Q17, compared to $6,370 million in 2Q16. This total includes an increase of 12% in revenues from the innovative health segment to $4.44 billion in 2Q17, compared to $3.95 billion in 2Q16.

The factors driving growth in US markets in 2Q17 include the following.

  • The innovative health segment reported 12% growth in US markets in 2Q17, mainly driven by increased sales of Lyrica, Chantix, Eliquis, Ibrance, Xeljanz, and Xalkori.
  • The essential health segment reported a 21% decrease in US markets. However, Effexor, Medrol, Revatio, Precedex, and Biosimilar Inflectra/Remsima reported growth in 2Q17.

Performance in international markets

Revenues from international markets fell 3% to $6.55 billion in 2Q17, compared to $6.78 billion in 2Q16. This impact includes flat operating revenues, offset by a 3% negative impact of foreign exchange.

The factors driving growth in international markets in 2Q17 include the following.

  • Revenues from the innovative health segment reflected 5% operational growth to $3.23 billion, driven by strong performance of Lyrica, Eliquis, Xalkori, Xeljanz, Refacto AF, Prevnar Vaccines, FSME/IMMUN-TicoVac vaccines, and the Consumer Healthcare franchise.
  • The essential health segment reported a 5% decrease in operating revenues in 2Q17, mainly due to lower sales of Peri-LOE products and CenterOne revenues.

The Vanguard Healthcare ETF (VHT) invests 5.6% of its total assets in Pfizer (PFE). VHT also invests 4.9% of its portfolio in Merck and Co. (MRK), 2.7% in Bristol-Myers Squibb (BMY), and 2.3% in Eli Lilly and Co. (LLY).

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