Pfizer (PFE) Q4 2017 earnings summary

Executive summary

• FY17 revenue was $52.546B, down 1% reported and flat operationally; excluding the HIS divestiture, revenue rose 2% operationally.

• FY17 adjusted diluted EPS increased 11% to $2.65; 10 FDA approvals were achieved, the most in more than a decade.

• FY18 guidance midpoints imply 4% revenue growth and 11% adjusted EPS growth; adjusted tax rate guidance is ~17%.

Financial highlights

• Q4 revenue was $13.703B, up 1% reported; operational revenue grew 2% excluding prior-year HIS revenue.

• Q4 reported net income was $12.274B and diluted EPS was $2.02, versus $775M and $0.13 a year earlier; tax effects were the primary driver.

• Q4 adjusted income rose 30% to $3.772B and adjusted diluted EPS rose 32% to $0.62; FY17 adjusted income rose 9% to $16.085B and EPS rose 11% to $2.65.

• FY17 reported net income was $21.308B and diluted EPS was $3.52; revenue was $52.546B, down 1%.

• FY17 adjusted operating costs totaled $32.9B, down 4%; adjusted cost of sales was 20.5% of revenue versus 22.0% in FY16.

Outlook and guidance

• FY18 guidance: revenue of $53.5B–$55.5B and adjusted diluted EPS of $2.90–$3.00; midpoints imply growth of 4% and 11%, respectively.

• Guidance includes a $2.0B revenue headwind from generic and biosimilar competition, partly offset by $900M favorable FX on revenue and $0.06 on adjusted EPS.

• Adjusted tax rate guidance is ~17%, expected to be sustainable; estimates remain provisional pending further tax-law analysis.

• Guidance assumes no U.S. generic Lyrica competition until June 2019, contingent on a six-month pediatric-exclusivity extension; it includes a full-year Consumer Healthcare contribution.

• Annual LOE headwinds are expected at ~$2B through 2020, ~$1B in 2021 and $500M or less annually in 2022–2025.