Pfizer Fb
Image source: Pfizer. 

In case you missed it, one of the world's largest pharmaceutical companies, Pfizer (NYSE:PFE), reported its fourth-quarter results before the opening bell on Tuesday, and its headline figures painted a pretty impressive picture.

Pfizer's Q4, by the numbers
For the quarter, Pfizer's revenue rose 7% to $14 billion, although the stronger U.S. dollar weighed on Pfizer's top-line to the tune of $934 million. Wall Street was expecting closer to $13.6 billion in sales. On just an operating basis, Pfizer's revenue rose 14%. Keep in mind that this also included revenue following the completion of its Hospira acquisition in September. Sans Hospira's contribution, Pfizer's sales would still have risen by 5% on an operating basis.

Adjusted income for the fourth quarter dipped 4% from Q4 2014 to $3.31 billion, resulting in adjusted EPS of $0.53. Even though adjusted EPS was down by $0.01 from the prior-year quarter, Pfizer topped the Wall Street consensus EPS by $0.01.

Based on the headlines, Pfizer had an impressive quarter. But, dig below the surface, and some of its figures are a bit mixed. Here are a mix of strikingly good and definitely disappointing data points from Pfizer's report.

Prevnar family sales: $1.86 billion (up 43% from Q4 2014)
I'm sorry, what slowdown in Prevnar 13 vaccine sales in the United States? Pfizer's management has been cueing Wall Street and investors to expect a slowdown in Prevnar 13's growth in the U.S. because it's reached its low-hanging fruit (i.e., the consumers who were already getting a pneumococcal vaccine). Pfizer's management has hinted not so subtly that reaching the remaining target population, which totals about 70% of those over the age of 65, could prove tough and costly.

Nonetheless, quarterly Prevnar 13 sales grew by a whopping 102% year over year in the U.S., and its sales could continue to gain steam since becoming a recommended vaccine by the Centers for Disease Control and Prevention in 2014. This top-selling vaccine may have a genuine shot at blowing past $7.5 billion in sales full-year sales in 2016 after generating $6.25 billion in 2015.

Ibrance

Image source: Pfizer.

Ibrance sales: $315 million
It was also another impressive showing for Ibrance, an oral therapy for metastatic HER2-negative, ER-positive breast cancer. We didn't have to look too far to know that Ibrance was set up for success. In clinical studies Ibrance wound up essentially doubling progression-free survival for patients, and it also added more than four months of median survival time relative to the placebo it was tested against. But Pfizer still needed to successfully launch and market its product. The company's Q4 results show that its launch is going as well, or better, than planned.

For the fourth quarter, Ibrance sales tallied $315 million, a 37% sequential increase from the third quarter. Sales for the full-year, which included three full quarters and a partial first quarter (since the product was approved in early February 2015) hit $732 million.

More importantly, investors were told of a roughly 33% sequential quarterly increase in patients on the drug during the J.P. Morgan Healthcare Conference in January. The correlative 37% increase in sales is suggestive that we're not seeing any pricing pressure whatsoever on Ibrance, which bodes extremely well for Pfizer. Look for Ibrance to easily become a blockbuster drug ($1 billion+ in sales) in 2016.

Aggregate share repurchase amount remaining: $16.4 billion
In December, Pfizer announced that its board had approved an additional $11 billion share repurchase agreement, which it would deploy from time to time. However, the company has been upfront that it anticipates executing a $5 billion accelerated share repurchase in the first-half of 2016. This is a similar move to the $6 billion accelerated share buyback it did in the first quarter of 2015.

Images

Image source: Pictures of Money via Flickr.

Now here's the real staggering figure. Inclusive of what was remaining on its share repurchase agreement before the December decision was made, Pfizer ended the year with as much as $16.4 billion remaining under its share repurchase authorizations. If fully deployed based on today's share count, we could be looking at close to a 9% reduction in outstanding shares, and a probable boost in EPS.

Buybacks are a key component to Pfizer's strategy of boosting shareholder yield, so don't forget about them.

Lipitor Q4 sales: $456 million (down 20% from Q4 2014)
Now for things that make you want to bang your head against a wall: Lipitor's full-year sales.

There's no grandiose secret as to why Pfizer's overall sales have slumped so dramatically over the past four years: the patent expiration of cholesterol-fighting drug Lipitor. At one time, Lipitor sales totaled more than $13 billion annually, and to date it's still the best-selling drug of all-time. However, the introduction of generics in the U.S. and in select overseas markets has eroded annual sales. In 2015, Lipitor sales dipped 10% (4% on an operating basis), but the drop accelerated in the fourth quarter.

What's really notable about Lipitor's weakness was its 19% drop (13% operational) in international sales, which until recently had been fairly consistent. It's possible Pfizer could be entering yet another period where Lipitor weighs on its global established product portfolio, which saw sales fall 12%, or 4% on an operating basis. It's unfortunately the patent cliff drug that just keeps on giving (all the wrong news).

Binoculars Pixabay
Image source: Pixabay.

2016 full-year guidance: $2.20-$2.30 in adjusted EPS
Finally, Pfizer unveiled its full-year guidance for 2016 which forecasts $49 billion to $51 billion in sales, and adjusted EPS of $2.20 to $2.30. The forecast now fully includes Hospira's contribution, but it excludes any potential impact of Pfizer's proposed combination with Allergan (NYSE:AGN), which is slated to be completed in the second-half of this year.

Now for the shocker: both figures fell well short of Wall Street's consensus of $53.1 billion in full-year sales and $2.36 in adjusted full-year EPS.

Why the miss? That's the great mystery that shareholders will be discussing this year. It's possible that the costs of integrating Hospira are proving higher than expected. An accelerated slowdown in Lipitor and other GEP sales could also be the culprit. It's even possible that strength in the dollar may accelerate, further hampering Pfizer's top- and bottom-line. We just don't know the full extent of how these challenges will impact Pfizer in the current year, and that uncertainty could weigh on Pfizer's stock.

Should Pfizer be in your portfolio?
The big question left is whether you should be holding, or adding, Pfizer to your investing portfolio. The answer to this question largely depends on your investing time frame and goals. If you're looking for rapid growth or a quick buck, you're probably not going to find it with Pfizer's mature product portfolio and pipeline.

However, if you want to take advantage of a market-topping dividend yield (and an impressive shareholder yield overall once buybacks are factored in) and a multi-year turnaround opportunity, then Pfizer could be your stock.

A lot is riding on its merger with Allergan and its ability to redomicile its headquarters in Ireland in order to reduce its effective tax rate. If the merger does indeed go through, Pfizer's EPS growth rate by 2020 could be in the double-digit percentage range. If you consider yourself a long-term investor and income is what you desire, Pfizer could definitely be worth a closer look.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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