Pfizer (PFE) earnings in the third quarter of 2024

Pfizer On Tuesday it reported third-quarter revenue and adjusted earnings that beat expectations, as the company's Covid vaccine and antiviral pill Paxlovid helped boost sales.

The pharmaceutical giant also raised its full-year outlook and now expects to post adjusted earnings per share of $2.75 to $2.95, up from its previous guidance of $2.45 to $2.65 per share.

Pfizer now expects revenue in a range of $61 billion to $64 billion, up from a previous revenue forecast of between $59.5 billion and $62.5 billion. That includes about $5 billion in expected revenue from its Covid vaccine and $5.5 billion from Paxlovid.

The results are a much-needed victory for Pfizer CEO Albert Bourla, who faces fresh pressure from activist investor Starboard Value. The company has a stake of approximately $1 billion in the pharmaceutical company.

Still, Pfizer shares fell more than 2% on Tuesday.

Here's what the company reported for the third quarter compared to what Wall Street expected, according to a survey of analysts by LSEG:

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

The company posted third-quarter net income of $4.47 billion, or 78 cents per share. That compares with a net loss of $2.38 billion, or 42 cents per share, during the same period a year ago. Excluding certain items, including restructuring charges and costs associated with intangible assets, the company posted earnings per share of $1.06 for the quarter.

Pfizer reported revenue of $17.7 billion for the third quarter, up 31% from the same period a year earlier.

It's a critical quarterly report for Pfizer, which is cutting costs as it works to recover from the rapid decline of its Covid business and share price over the past two years. The drugmaker's stock is trading at about half its pandemic-era high, putting the company's market capitalization at about $163 billion.

Starboard managing director Jeff Smith argues that Pfizer failed to capitalize on the windfall profits from its Covid products and, in the process, destroyed tens of billions of dollars in market value. Smith points to what he believes are management's poor investments in research and development and large acquisitions that have yet to bear fruit for the struggling company.

Notably, during the quarter, Pfizer withdrew from global markets a critical sickle cell anemia drug it had acquired in a $5.4 billion deal for Global Blood Therapeutics. Starboard calls for a massive overhaul of Pfizer, saying the company needs to be more disciplined in its investments.

Bourla said Tuesday that he and other executives met with Starboard two weeks ago and called it “constructive and cordial.”

Pfizer agrees with some of the points raised by Starboard, but has “very different views on many others,” Bourla said. For example, Starboard questioned Pfizer's capital investment for business development. But Pfizer believes its deals will generate significant benefits for shareholders, Bourla said.

Bourla pointed to changes Pfizer has implemented over the past 10 months, such as appointing new executives and separating its U.S. and international businesses.

Still, he said, “we will engage productively with our stakeholders, including Starboard” and will consider “all good ideas that are offered.”

Meanwhile, Pfizer reiterated Tuesday that it is on track to generate at least $4 billion in savings by the end of the year. In May, the company announced a multi-year plan to reduce costs, and the first phase of the effort is scheduled to generate $1.5 billion in savings by 2027.

Pfizer's third-quarter advance was driven in part by higher demand for its Covid products.

Paxlovid, its antiviral pill, generated $2.7 billion in sales during the quarter, up from $202 million in the same period a year earlier.

That growth is mainly due to strong demand, particularly in the United States during a recent wave of the virus. It was also helped by a one-time contractual delivery of 1 million Paxlovid treatments to the federal government's national stockpile during the third quarter, representing $442 million in revenue.

Those results are higher than the $707.7 million in sales analysts expected for Paxlovid, according to estimates compiled by StreetAccount.

“Demand for Paxlovid appears to have stabilized at current levels and appears to be closely related to each wave of Covid-19,” Bourla said.

The company's Covid vaccine generated $1.42 billion in revenue, up 9% from the same period last year.

Pfizer said the growth was primarily driven by the vaccine's shelf life, pointing to the earlier approval of the updated version of the shot this fall compared to last year. This growth was partially offset by lower contractual deliveries and demand in international markets.

Analysts were expecting $1.04 billion in sales from the vaccine, according to StreetAccount.

Excluding Covid products, Pfizer said third-quarter revenue rose 14% on an operating basis, driven by approved cancer products from Seagen, which it acquired last year for a whopping $43 billion.

Those drugs generated $854 million in revenue for the quarter, including $409 million from a targeted treatment for bladder cancer called Padcev, as well as $268 million from Adectris, a drug that targets certain lymphomas. Pfizer completed its acquisition of Seagen in December.

Revenue also got a boost from sales of Pfizer's Vyndaqel drugs, which are used to treat a certain type of cardiomyopathy, a disease of the heart muscle. These drugs recorded $1.45 billion in sales, 62% more than in the third quarter of 2023.

Analysts expected that drug group to raise $1.37 billion in the quarter, according to StreetAccount estimates.

Pfizer said its blood thinner Eliquis, jointly marketed by Bristol Myers Squibb, also helped drive revenue growth during the period. The drug posted revenue of $1.62 billion during the quarter, 8% more than the same period last year.

This is slightly higher than the $1.59 billion analysts were expecting, according to StreetAccount.

However, Eliquis sales could take a hit in 2026, when a new price for the drug for certain Medicare patients takes effect following negotiations with the federal government. Those price negotiations are a key provision of President Joe Biden's Inflation Reduction Act that the pharmaceutical industry fiercely opposes.

Meanwhile, Pfizer's vaccine against respiratory syncytial virus (RSV) earned $356 million in revenue in the third quarter. The vaccine, known as Abrysvo, entered the market during the third quarter of 2023 for older people and expectant mothers who can transmit protection to their fetuses.

Analysts expected the injection to generate sales of $255.4 million, according to StreetAccount estimates.

Last week, Pfizer's RSV vaccine won approval for adults ages 18 to 59 who are at higher risk for the disease, a decision that will likely significantly expand the vaccine's reach in the US.