Pfizer surpasses earnings expectations and raises full-year forecasts due to the success of its Covid-19 products.

• Pfizer reported third-quarter revenue and adjusted profit that blew past expectations.
• The company's full-year outlook was improved due to the success of its Covid vaccine and antiviral pill Paxlovid in increasing sales.
• Starboard Value is waging a proxy battle against Pfizer, which is facing a critical quarterly report.

The company's Covid vaccine and antiviral pill Paxlovid helped boost sales, resulting in third-quarter revenue and adjusted profit that exceeded expectations on Tuesday.

The pharmaceutical company increased its full-year earnings per share outlook and now anticipates a range of $2.75 to $2.95, an improvement from its previous projection of $2.45 to $2.65 per share.

Pfizer has revised its revenue forecast to between $61 billion and $64 billion, an increase from its previous range of $59.5 billion to $62.5 billion. This includes approximately $5 billion in anticipated revenue from its Covid vaccine and $5.5 billion from Paxlovid.

Based on a survey of analysts by LSEG, the company's third-quarter results differed from Wall Street's expectations.

• Earnings per share: $1.06 adjusted vs. 62 cents expected
• Revenue: $17.7 billion vs. $14.95 billion expected

The company's third-quarter net income was $4.47 billion, or 78 cents per share, which is a significant improvement from the net loss of $2.38 billion, or 42 cents per share, in the same period last year. When excluding certain items, such as restructuring charges and costs associated with intangible assets, the company's earnings per share for the quarter were $1.06.

In the third quarter, Pfizer generated $17.7 billion in revenue, representing a 31% increase compared to the same period in the previous year.

Pfizer's quarterly report is critical as it faces cost-cutting measures to recover from the decline of its Covid business and share price over the past two years. Its shares are currently trading at about half of their pandemic-era high, with a market cap of approximately $163 billion.

Starboard Value, an activist investor with a $1 billion stake in Pfizer, is waging a proxy battle against the pharmaceutical company.

Jeff Smith, a managing member of Starboard, argues that Pfizer missed out on the profits generated by its Covid products and lost billions of dollars in market value as a result. Smith believes that Pfizer's poor investments in research and development and unproductive acquisitions have contributed to the company's struggles.

In the quarter, Pfizer withdrew a critical sickle cell drug it had acquired in a $5.4 billion deal for Global Blood Therapeutics.

Pfizer is being called upon by Starboard to undergo a significant transformation, with the need for greater control over its financial decisions being emphasized.

Pfizer is set to achieve at least $4 billion in savings by the end of the year, as announced in May, with the first phase of the cost-cutting plan targeting $1.5 billion in savings by 2027.

In the quarter, Paxlovid generated $2.7 billion in sales, representing a significant increase from the $202 million it recorded in the previous year.

The growth in demand, particularly in the U.S., during a recent wave of the virus, and a one-time contractual delivery of 1 million treatment courses of Paxlovid to the federal government's national stockpile during the third quarter, which accounted for $442 million in revenue, mainly contributed to this growth.

According to StreetAccount's estimates, Paxlovid's sales were higher than the $707.7 million that analysts had predicted, resulting in a positive outcome.

The company's revenue from Covid shots increased by 9% to $1.42 billion compared to the previous year.

Pfizer stated that the growth in sales was primarily due to the earlier approval of the updated version of the vaccine this year compared to last, but this was partially offset by lower contractual deliveries and demand in international markets.

According to StreetAccount, analysts predicted $1.04 billion in sales for the shot.

Non-Covid product growth

Pfizer reported a 14% increase in revenue for the third quarter on an operational basis, driven by the sales of cancer products from Seagen, which it acquired for $43 billion last year.

In the quarter, the drugs generated $854 million in revenue, with $409 million from Padcev and $268 million from Adectris. Pfizer completed its acquisition of Seagen in December.

Sales of Pfizer's Vyndaqel drugs for treating cardiomyopathy increased by 62% in the third quarter of 2023, contributing to a rise in revenue.

According to StreetAccount's estimates, analysts predicted that the group of drugs would generate $1.37 billion in revenue for the quarter.

Eliquis, a blood thinner co-marketed by Pfizer and Bristol Myers Squibb, contributed to revenue growth during the quarter, with the drug generating $1.62 billion in revenue, an 8% increase from the previous year.

According to StreetAccount, the actual revenue was higher than the $1.59 billion that analysts had predicted.

The Inflation Reduction Act, which President Joe Biden signed into law, includes a provision for price negotiations with the federal government that could result in a decrease in sales of Eliquis for certain Medicare patients in 2026. This provision is opposed by the pharmaceutical industry.

In the third quarter of 2023, Pfizer's RSV vaccine, Abrysvo, generated $356 million in revenue, specifically for seniors and expectant mothers who can pass on protection to their fetuses.

According to StreetAccount estimates, analysts predicted that the shot would generate sales of $255.4 million.

The Pfizer RSV shot has been approved for adults aged 18 to 59 who are at higher risk of developing the disease, which is likely to increase the jab's reach in the U.S.