Pfizer (PFE) Q1 2017 earnings summary

Executive summary

• Q1 revenue was $12.779B, down 2% reported and 1% operationally; fewer selling days reduced revenue by ~$300M.

• Reported diluted EPS was $0.51 vs. $0.49; adjusted diluted EPS was $0.69 vs. $0.67.

• 2017 guidance was reaffirmed; midpoint implies 4% operational revenue growth and 10% operational adjusted diluted EPS growth, excluding FX and HIS divestiture.

Financial highlights

• Revenue fell $226M YoY: $110M operationally and $116M from unfavorable FX; excluding HIS and FX, revenue rose $97M, or 1%.

• Reported net income rose 3% to $3.121B; adjusted income was $4.192B vs. $4.177B.

• Lower legal and asset-impairment charges and higher asset-disposal gains benefited reported results; higher tax rate, fewer selling days and lower royalty income were offsets.

• Operating cash flow was $1.589B; cash and cash equivalents were $4.057B at April 2, 2017.

Outlook and guidance

• FY2017 guidance: revenue $52.0B–$54.0B; adjusted diluted EPS $2.50–$2.60; adjusted cost of sales 20.0%–21.0%.

• Guidance includes a $2.4B revenue headwind from generic and biosimilar competition and $0.5B from FX; FX is expected to reduce adjusted EPS by $0.03.

• Adjusted SI&A guidance is $13.7B–$14.7B, R&D $7.5B–$8.0B and effective tax rate ~23%.

• New cost-reduction initiatives target ~$1.2B annual savings by 2020, with ~$900M in expected costs through 2019.