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Analyzing Pfizer’s 1Q17 Earnings

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A look at Pfizer’s earnings

Pfizer (PFE) reported a 2% fall in its top line for 1Q17 as part of its latest earnings announcement on May 2, 2017. The company missed Wall Street analysts’ 1Q17 estimates for revenues but surpassed analysts’ estimates for earnings-per-share or EPS. It reported EPS of $0.69 on revenues of $12.78 billion for 1Q17, compared to estimates of $0.67 on revenues of $13.09 billion.

The stock price fell ~0.5% to the closing price of $33.61 after the earnings release.

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1Q17 performance

Pfizer’s growth is driven by its Innovative Health business, which includes the Global Innovative Pharmaceuticals segment and Global Vaccines, Oncology, and Consumer Healthcare segment. The Essential Health business is more mature and seems to have secured its market share among competitors.

Pfizer’s top line fell 2% at ~$12.78 billion for 1Q17, driven by an operational decrease of ~1% and a negative currency impact of ~1%, including the impact of legacy Hospira operations. Excluding Hospira, Pfizer reported 1% operational growth in revenues for 1Q17. At constant exchange rates, the Innovative Health segment reported 6% growth while the Essential Health segment reported a 9% decrease in revenues in 1Q17.

Geographically, US markets contributed 52% of the company’s total revenues at $6.64 billion for 1Q17—a decrease of ~0.4% in revenues from 1Q16. In the International markets, sales fell 3% to $6.14 billion for 1Q17, contributing ~48% of total revenues.

To diversify risk, investors can also consider ETFs like the iShares US Pharmaceuticals ETF (IHE), which invests ~8.0% of its total assets in Pfizer. The iShares US Pharmaceuticals ETF also invests 9.4% of its total assets in Johnson & Johnson (JNJ), 7.9% in Merck and Co. (MRK), and 3.6% in Mylan (MYL).

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