The stock market got a nice break on Monday, but Tuesday morning didn't seem to bring much follow-through on Wall Street. Rising interest rates and worries about what the Federal Reserve might do with monetary policy later this week weighed on investor sentiment. As of 7:30 a.m., futures on the Dow Jones Industrial Average (^DJI -0.12%) were down 148 points to 32,832. S&P 500 (^GSPC -0.10%) futures had dropped 19 points to 4,132, while Nasdaq Composite (^IXIC -0.07%) futures had fallen 65 points to 13,008.
Some of the giants of the investing universe are reporting their latest financial results this week, and Tuesday morning's crop of candidates included a couple of well-known names. Both Pfizer (PFE -0.02%) and BP (BP 0.05%) have had a lot going for them lately, but only one of them was moving higher on Tuesday morning after telling investors about how their businesses fared during the first quarter of 2022.
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Pfizer looks to keep the world well
Shares of Pfizer were down less than 1% in premarket trading on Tuesday morning. The drugmaker's first-quarter results were generally solid, but a lot of investors were focusing closely on Pfizer's vaccine and treatment options for COVID-19.
Overall, Pfizer continued to get a big boost from its Comirnaty vaccine and Paxlovid antiviral therapy. Revenue jumped 82% in the first quarter from year-ago levels to $25.7 billion. Yet without the contributions from the two COVID-19-related products, revenue would have been up just 2%. Earnings were also sharply higher, jumping 72% year over year to $1.62 per share on an adjusted basis.
The real question going forward is to what extent Pfizer's financial results will normalize as the future course of the pandemic plays out. Vaccines made up nearly 60% of total revenue for Pfizer, and so seeing that number fall back would cause a devastating drop in sales. Still, Pfizer anticipates revenue should come in between $98 billion and $102 billion in 2022, which suggests the company sees pandemic-related products still playing a key role.
Nevertheless, higher costs are also hitting Pfizer, which led to a slight $0.10 cut to full-year earnings guidance to a new range of $6.25 to $6.45 per share. That still implies a price-to-earnings ratio of less than 8, reflecting the likelihood that future earnings will fall if Pfizer can't replace all the money it has made on Comirnaty and Paxlovid.
BP looks energetic
Meanwhile, shares of BP were up nearly 5% on Tuesday morning. The oil giant reported a massive loss related to its exit from its holdings of Russian energy company Rosneft, but strong operational results reflected the favorable conditions across the energy industry right now.
BP's numbers were eye-popping. Total revenue climbed 43% to $49.3 billion, as prices on crude oil and natural gas soared. However, the company posted a loss of $20.4 billion. That largely resulted from pre-tax charges of $25.5 billion related to BP's decision to exit its nearly 20% stake in Rosneft and its other business relationships in Russia. When you adjust for that number, however, underlying replacement cost profit jumped more than 50% due to oil and gas trading efforts, higher price realizations on its energy products, and more favorable conditions in refining.
Longer-term, BP has worked on getting its balance sheet stronger, and those efforts were apparent during the quarter. The energy giant cut its net debt to $27.5 billion, and that left enough capital for BP to announce a $2.5 billion stock repurchase program.
The Russian invasion of Ukraine has been costly for BP, but favorable conditions in the energy markets are cushioning the blow. Investors now hope the oil company can finally mount a more convincing rebound and join its peers with stronger stock-price gains.
