Pfizer stock jumped Tuesday after the S&P 500 pharma titan beat Wall Street's second-quarter expectations on the back of solid cost-cutting measures.
Pfizer is angling to cut $7.7 billion in costs by 2027, offsetting several notable research and development setbacks. As a result, the company came in with adjusted earnings of 78 cents per share on $14.65 billion in second-quarter sales.
Earnings smashed forecasts by 20 cents per share and sales beat the $13.56 billion call from analysts polled by FactSet. On a year-over-year basis, earnings surged 30% while sale rose 10%.
Pfizer stock jumped 5.2% to close at 24.75. Shares bounded above their 50-day line, though they remained well below their 200-day moving average, according to MarketSurge.
Covid Products Boost Pfizer Stock
Edward Jones analyst John Boylan called out better-than-expected sales of Covid products and Padcev, a cancer treatment acquired with Seagen. He noted revenue from migraine treatment Nurtec came in light and bears watching.
Sales of Covid vaccine Comirnaty, developed with BioNTech, rocketed 96% to $381 million, while sales of oral treatment Paxlovid ramped 70% to $427 million. The Street projected a much lower $195 million and $240.5 million, respectively.
But sales of Covid-tied products are hard to predict. The lion's share of sales take place in the second half of the year, lining up with the fall season. But their strength often depends on the severity of the season.
"Still, it was good to see sales guidance overall maintained for the year despite COVID-19 sales uncertainty," Boylan said in a report.
He has a buy rating on Pfizer stock.
For the year, Pfizer called for $61 billion to $64 billion in sales. The company hiked its earnings outlook to a range of $2.90 to $3.10 per share. The latter includes a 20-cent hit due to a licensing deal with China's 3SBio.
Cost-Cutting Measures In Focus
Daniel Barasa, portfolio manager for Gabelli Funds, notes Pfizer is already well into its plan to cut $7.7 billion in costs by 2027. This will help offset recent setbacks in research and development, and ease investors' worries about Pfizer's ability to pay its dividend.
In 2028, Pfizer's pipeline could come back into play and that's where investors have had their doubts, he said in an email to Investor's Business Daily. He calls out several experimental cancer drugs from the Seagen portfolio that could become blockbusters in the distant future.
Until then, "we expect Pfizer will continue to be a margin story, as opposed to a top-line-driven story," he added.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
