Why Pfizer Inc.(NYSE:PFE) Shares Could Rally on Quarterly Earnings

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Pfizer Inc (NYSE:PFE) shares were down 0.69% on Monday and flat in after-hours trading as market watchers are holding out for the company’s earnings report. This will be released ahead of the bell in today’s US session and could lend significant upside for the stock.

On the stock’s daily time frame, price is on a downtrend and is currently making its way towards the former resistance around $31. A break below this level could lend more losses to the $28 support level while a bounce could lead to a move back to the nearby resistance at $34. Volume is still subdued but investor interest will pick up during the release of the quarterly earnings report, especially if the results come in stronger than expected.

Analysts are expecting earnings per share of $0.61 on revenues of just over $13 billion, which would represent strong year-over-year growth. On a quarterly basis, earnings growth is expected to be mostly flat. The company has made a lot of acquisitions in the past months and these are expected to add to their bottom line. Of particular interest to traders will the company’s margins as well.

The recent FDA approval for Prevnar 13 should help sales rebound, especially after a disappointing run in the second quarter with the Prevnar family of vaccines weighing on sales for the period. Back then, the cancer drug ibrance was a standout performer in the with sales chalking up a 300% gain from the previous year to $514 million.

Forward guidance on products like top-selling cancer drug, Xtandi, which came from the Medivation acquisition of Pfizer Inc could also influence how the stock reacts to the earnings release today. On the flip side, projected declines from Viagra and Lyrica over the next couple of years could dampen the company’s outlook so investors are keen to find out whether the company’s current portfolio would be enough to offset these estimated reductions in sales.

As it is, Lyrica and Viagra still account for a huge chunk of the company’s biggest revenue division which is Internal Medicine. The former made $1 billion in revenues for the past quarter while the latter raked in $401 million. Sustaining these revenues is no easy feat so the company will definitely need some backing from the other drugs in its portfolio in order to reverse from its slide and eventually have the stock climb back to $40.

Also, recall that in the third quarter, Pfizer Inc abandoned its plan to split into two companies, ultimately judging that this will not be the best way to maximize shareholder value. With that, the company is likely to provide more explanatory details, as well as prove that their current path would provide more value to shareholders.

Pfizer Inc is a research-based global biopharmaceutical company that is engaged in discovering, developing and manufacturing of healthcare products. Its segments include Pfizer Innovative Health (IH) and Pfizer Essential Health (EH) while its biopharmaceutical products include Lipitor, Sutent and the Premarin family of products. Its biotechnology products include BeneFIX, ReFacto and Xyntha.

Apart from that, Pfizer Inc has a contract manufacturing business, Pfizer CentreOne, which consists of its contract manufacturing and active pharmaceutical ingredient sales operations. Its research focuses on six areas, which include immunology and inflammation, cardiovascular and metabolic diseases, oncology, vaccines, neuroscience and pain, and rare diseases and has subsidiaries Hospira, Inc. and Medivation, Inc.

 

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.