Pfizer (PFE -1.05%) didn't meet Wall Street's estimates with its first-quarter results. Instead, it blew past those estimates.
The big drugmaker reported Q1 revenue of $25.7 billion, well above the consensus projection of $23.9 billion. Pfizer posted adjusted earnings of $1.62 per share, much higher than the average analysts' earnings estimate of $1.47 per share.
You'd think that the pharma stock would jump on such great news. But it didn't. Here are three flaws in Pfizer's otherwise stellar Q1 results.
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1. Disappointing non-COVID growth
Pfizer has set investors' expectations really high. The company has consistently stated that it should deliver a revenue compound annual growth rate of 6% through 2025, excluding any impact of its COVID-19 programs.
However, Pfizer disappointed investors on both fronts with its Q1 update. The company delivered 82% year-over-year overall operational revenue growth in the quarter. Excluding COVID-19 vaccine Comirnaty and Paxlovid, though, that growth rate was just 2%.
Granted, there were fewer selling days in the first quarter of 2022 than in the prior-year period. But that caused Pfizer's operational growth to be only 1% lower than it otherwise would have been.
Still, outgoing Pfizer CFO Frank D'Amelio said in the Q1 call prepared remarks that full-year 2022 revenue growth should be around 5%. He also stated that the company remains "confident" that it will be able to achieve its goal of 6% annual growth through 2025.
2. No increase in Paxlovid guidance
Several Pfizer executives have indicated in the past that 2022 sales for COVID-19 pill Paxlovid could be much higher than the previous official guidance of $22 billion. In the company's Q4 conference call, CEO Albert Bourla even said that sales for Paxlovid "could become way bigger than what we have right now."
But any hopes that Pfizer would increase its 2022 sales outlook for Paxlovid were dashed. The company maintained its previous full-year guidance.
The good news, though, is that Pfizer still expects to produce 120 million doses of the COVID-19 pill this year. If the company sells most of those doses, its sales for Paxlovid should be significantly higher than the guidance of $22 billion.
3. Revised earnings outlook
The other flaw in Pfizer's Q1 update was that the company lowered its adjusted earnings guidance for full-year 2022. Pfizer now expects adjusted earnings per share will be between $6.25 and $6.45. It previously projected adjusted earnings per share in the range of $6.35 to $6.55.
This isn't as bad as it might seem, however. Pfizer stated that the downward revision was due to a "negative impact for an accounting policy change to include all acquired in-process R&D expenses."
Actually, Pfizer's adjusted earnings on an operational basis are expected to increase by $0.10 per share this year. The combination of the accounting policy change and currency fluctuations offset this increase.
Lots of bright spots
Investors seemed to focus on the negatives in Pfizer's Q1 update, with the stock slipping in early trading on Tuesday. However, there were lots of bright spots.
COVID-19 vaccine Comirnaty continued its winning ways. The vaccine raked in sales of $13.2 billion in the first quarter. Comirnaty's market share of cumulative doses supplied to the developed world now stands at 67%. Its market share in the entire world is now 62%.
Paxlovid generated Q1 sales of $1.5 billion. The COVID-19 pill claimed a market share of nearly 90% in the U.S. in the week ending April 22, 2022.
Several of Pfizer's non-COVID products also delivered strong sales growth. These include blood thinner Eliquis, the Prevnar pneumococcal vaccine franchise, and rare-disease drug Vyndaqel/Vyndamax.
Pfizer could also have more good news on the way. In particular, the company thinks that its $6.7 billion acquisition of Arena could begin paying off soon. Pfizer expects to file for regulatory approvals of Arena's lead program, etrasimod, in treating ulcerative colitis in the second half of 2022.
