Pfizer profit misses estimates as revenue falls; plans no 2020 share repurchases
(Reuters) – Pfizer Inc (PFE.N) on Tuesday reported quarterly profit that fell short of Wall Street expectations for the first time in at least two years, and the drugmaker said it will no longer rely on share repurchases to help drive growth.
FILE PHOTO: The Pfizer logo is seen at their world headquarters in Manhattan, New York, U.S., August 1, 2016. REUTERS/Andrew Kelly
Shares of the largest U.S. drugmaker, which also reported higher operating costs and sharply lower sales of its off-patent pain treatment Lyrica, were down 4% at $38.51.
The company, which is spinning off its Upjohn unit that sells branded drugs that have lost patent protection such as Lyrica and Viagra into a combination with generic drugmaker Mylan NV (MYL.O), said it expects that deal to be completed by the middle of this year as it focuses on more profitable newer growth medicines.
On a conference call with analysts, company executives said it does not plan any share repurchases this year. It bought back nearly $9 billion of its own shares in 2019.
“We will focus instead on increasing the dividend and investing in the business during this period of growth,” said Chief Financial Officer Frank D’Amelio.
Chief Executive Officer Albert Bourla said Pfizer would not need such “financial engineering” to produce growth and that share buybacks could dilute it deal making firepower.
Pfizer forecast full-year adjusted earnings of $2.25 to $2.35 per share, excluding the Upjohn unit. Analysts on average are estimating 2020 earnings of $2.11 per share.
However, UBS analyst Navin Jacob raised concerns over higher-than-expected fourth-quarter operating costs and sales of some drugs that fell short of Wall Street estimates, which contributed to the earnings miss.
“It’s very surprising,” he said, noting that Pfizer tends to be “very good at cost control.”
Excluding special items, Pfizer said it had adjusted earnings of 55 cents per share, three cents shy of Wall Street expectations, according to IBES data from Refinitiv
Sales of breast cancer drug Ibrance, an important growth driver, rose 13% to $1.28 billion in the quarter, but fell short of the consensus estimate of $1.35 billion, according to Refinitiv data.
Total revenue fell 9% to $12.69 billion in the fourth quarter, with Lyrica sales plunging 67% to $433 million in the face of generic competition.
Lower revenue also reflected the absence of the consumer health business it sold last year.
Reporting by Saumya Sibi Joseph and Tamara Mathias in Bengaluru, Michael Erman in New York; Editing by Saumyadeb Chakrabarty and Bill Berkrot