Shares of Pfizer (PFE) and Allergan (AGN) dipped Tuesday after the pharmaceutical companies topped third-quarter earnings views, though Pfizer's sales lagged and the Dow Jones component issued cautious 2018 guidance.
XOn the stock market today, Pfizer stock slid 0.8% to close at 42.89. Allergan stock plunged 7.6% to close at 160.67 despite its third-quarter beat and stronger-than-expected guidance for the year.
Mizuho analyst Irina Koffler blamed one-time issues for "clouding the picture" on Allergan. Further, Allergan's guidance for 2018 wasn't bullish enough to accommodate a "significant" beat for sales of eye drug Restasis in the third quarter.
"We expect investors to challenge the revised guidance as overly conservative and worry about softness in the fourth quarter," she said. "This theme has played out all year long, and we believe management could mitigate concerns on the earnings call."
Pfizer Reports Mixed Third Quarter
Pfizer's adjusted earnings grew 16% to 78 cents, beating the forecast of analysts polled by Zacks Investment Research by two pennies. But sales of $13.298 billion were just light of analysts' view for $13.304 billion. Revenue grew 1% year over year.
Other analyst predictions had pegged adjusted earnings at 75 cents per share and sales at $13.53 billion.
By segment, Pfizer's innovative health had the better quarter. Sales grew 5% operationally to $8.47 billion. Meanwhile, sales in essential health — which includes nonviral anti-infective medicines, biosimilars and sterile injectable drugs — fell 4% to $4.83 billion.
Pfizer cited drug-pricing pressure in the U.S. and generic competition for declining sales in its essential health unit. Nearly identical copies of biologic drugs, called biosimilars, almost helped to offset that, growing 46% operationally.
For the year, Pfizer narrowed its adjusted profit guidance to $2.98-$3.02 a share, leaving the midpoint intact despite the third-quarter beat. At the midpoint, Pfizer's guidance just beat analysts' model for $2.99 a share.
The Dow Jones component also lowered the high end of its full-year sales guidance. It now expects $53 billion to $53.7 billion. Previously, Pfizer modeled $53 billion to $55 billion. The new guidance lagged analyst forecasts for $53.84 billion.
Pfizer cited lower-than-anticipated essential health sales and exchange-rate headwinds for its guidance cut.
Allergan Beats Third-Quarter Views
Allergan reported $3.91 billion in sales and adjusted earnings of $4.25 a share. Both metrics beat the average of analysts polled by Zacks for $3.84 billion and $4.01, respectively. On a year-over-year basis, profit rose 2.4% and sales declined 3%.
Chief Executive Brent Saunders blamed the loss of exclusivity for some key brands for the decline in sales. But the core business, representing 90% of Allergan's total sales, grew 5.9% vs. the year-ago period and 7.4% on a constant-currency basis.
"With this strong momentum in the business and based on our revised expectations for Restasis, we increased our full-year 2018 guidance for net revenue and non-GAAP (adjusted) performance net income per share," he said in a written statement.
For the year, Allergan raised its sales guidance to $15.575 billion to $15.725 billion, north of consensus views for $15.56 billion. Allergan also sees adjusted earnings of $16.20-$16.60 a share. At the midpoint, that beat the consensus for $16.34.
Botox Sales Strong Despite Competition
Mizuho's Koffler noted that specific drugs faced challenges in the quarter. Health officials in several countries told Allergan to recall Ozurdex, a steroidal implant for an eye disease, on worries of contamination issues.
She also noted largely flat sales of CoolSculpt, a method of freezing unwanted fat cells. Sales were $84.9 million, rising incrementally from $83.4 million in the year-ago period.
Revenue from eye drug Restasis declined 18.8% to $298 million. But that beat expectations, Koffler said. Further, Botox cosmetic sales in the U.S. were strong, growing 13.9% to $216 million. That topped Koffler's view for $214.8 million.
Botox can be used to treat a myriad of noncosmetic issues. It's frequently used to prevent migraines. But a new class of drugs from Amgen (AMGN)/Novartis (NVS), Teva Pharmaceutical (TEVA), Eli Lilly (LLY) and Alder Biopharmaceuticals (ALDR) could challenge Botox.
Third-quarter therapeutic Botox sales grew 10.4% in the U.S. to $407.4 million. Koffler had modeled $387.3 million.
"We believe this stability may be reassuring for investors concerned about Botox migraine competition," she said. "Consensus estimate for the global Botox franchise (was) $845.5 million, so Allergan delivered a nice beat, with sales of $879.7 million."
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The post Pfizer, Allergan Dive On Cautious 2018 Guidance, Though Profit Tops appeared first on Investor's Business Daily.
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