How Pfizer Stacks Up Against Merck on Earnings

Pfizer reported a 2.2% drop in its quarterly revenues, which were hampered by that pesky strong dollar. The company said that its reported revenues of $12.1 billion actually increased 6% operationally, including a $0.3 billion legacy Hospira operations. The drug giant’s adjusted earnings per share (EPS) were $0.60, and the net figure was down at $0.34 per share. The Thomson Reuters consensus EPS estimate was $0.51 on adjusted basis, with revenues expected to be $11.56 billion.

Pfizer went on to say that its innovative products business grew by some 21% operationally. Pfizer completed its acquisition of Hospira in early September, and that made the comparables look a bit different than some analysts may have expected.

One key issue here is guidance. Pfizer put its earnings guidance for 2015 at $2.16 to $2.20 per share, up more than a dime per share from its prior guidance. It also raised revenue guidance by about $1 billion to a range of $47.5 billion to $48.5 billion. Thomson Reuters had estimates of $2.09 EPS and $47.61 billion.

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Merck said that its adjusted earnings rose by 7% to $0.96 EPS, but its GAAP earnings were down at $0.64 per share. Global revenue was down 5% to $10.1 billion, but adjusting for foreign exchange, acquisitions and divestitures would have generated growth of 4%. Thomson Reuters had the consensus estimates at $0.92 EPS on almost $10.1 billion in revenue.

Merck went on to raise its guidance as well, with adjusted earnings in a new range of $3.55 to $3.60 per share, versus a $3.51 EPS consensus analyst target. Management talked about solid results and a focused strategy despite an evolving market.

So, which drug giant is looking better after earnings?

Pfizer shares were up 2.8% at $35.12 Tuesday morning. Its consensus analyst price target is $39.89 and its 52-week trading range is $28.47 to $36.46. Pfizer’s dividend yield is about 3.3%.

Merck shares were up 1.8% at $53.87. Its consensus price target is $62.47 and it has a 52-week range of $45.69 to $63.62. Merck’s dividend yield is roughly 3.4%.

Pfizer looked a tad stronger than Merck did on earnings, but Merck is much farther off of highs. This may simply be close enough to consider as a tie without getting into the nitty-gritty of earnings.

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