Pharmaceutical giant Pfizer
What analysts say:
- Buy, sell, or waffle? With five buys, 10 holds, and one sell, most analysts still aren't sure Pfizer has reached the bottom.
- Revenue: The top line is expected to come in essentially flat at just over $12 billion. Changes in currency rates could determine whether Pfizer makes or breaks that number.
- Earnings. Analysts are looking for an additional $0.02 over the third quarter of last year to an adjusted $0.60 per share.
What management says:
Management is trying to cut spending and reorganize itself into a more profitable company. The only problem is that you can't cut forever, and whether they like it or not, Lipitor is eventually going to see generic competition.
The company needs to spend some of the $26 billion in cash and short term investments it's been hoarding. Ironically, management is looking pretty smart by waiting to make a purchase as prices have come down recently. Pfizer could potentially make a large acquisition of Genzyme
What management does:
Restructuring charges, which have ranged from $535 million to over $3.6 billion per quarter over the last year and a half, have been killing net margins. They should end eventually (hopefully), just in time for operating margins to coming crashing down with the loss of Lipitor exclusivity.
It's nice to see free cash flow relative to earning increasing. Pfizer needs as much cash as it can to pay its dividend -- the thing that's contributing most to keeping up its stock price at this point, in my opinon.
|
3/2007 |
6/2007 |
9/2007 |
12/2007 |
3/2008 |
6/2008 |
|
|---|---|---|---|---|---|---|
|
Gross |
84.7% |
84% |
84% |
84% |
83.7% |
83.7% |
|
Operating |
31.6% |
29.7% |
29.7% |
30.5% |
29.3% |
31.1% |
|
Net |
37.9% |
36.1% |
30.9% |
16.8% |
15.8% |
18.5% |
|
FCF/Revenue |
26.3% |
23.7% |
25.4% |
23.7% |
27.9% |
30.2% |
|
Growth (YOY) |
3/2007 |
6/2007 |
9/2007 |
12/2007 |
3/2008 |
6/2008 |
|---|---|---|---|---|---|---|
|
Revenue |
4.4% |
2.4% |
(0.3%) |
0.1% |
(2.7%) |
0.8% |
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.
Like it's expected to do this quarter, Pfizer has been treading water with its revenue over recent quarters. To be fair, it did sell its consumer health care division to Johnson & Johnson
One Fool says:
Perhaps more than ever, revenue and earnings can take a back seat to cash flow. It's cash that's driving Pfizer's ability to make future acquisitions and pay its dividend, and those are the things that are keeping a floor on Pfizer's stock price.
Whether it can turn things around like Merck
