Investors better hope that Pfizer
Despite adding substantial revenue from Wyeth, the bottom line won't grow much. Increased interest expenses will eat up profits, and they'll be spread among a larger pie, since the purchase was paid for partially in shares.
Metric |
2009 |
2010 |
2012 |
---|---|---|---|
Revenue (guidance for future years) |
$50 billion |
$67 billion to $69 billion |
$66 billion to $68.5 billion |
Non-GAAP EPS (guidance for future years) |
$2.02 |
$2.10 to $2.20 |
$2.25 to $2.35 |
Annual EPS growth from 2009 |
4% to 8.9% |
3.7% to 5.2% |
Source: Company Press Release. EPS = earnings per share.
Pfizer's 2012 revenue guidance is $1.5 billion lower than what the company thought the top line would be when it announced the Wyeth acquisition, but the difference seems to all be accounted for. Pfizer set up a joint venture with GlaxoSmithKline
However, instead of focusing on earnings, cash flow is a better indication of how Pfizer is doing. This is especially true for companies like Pfizer, PepsiCo
More importantly, the cash should give Pfizer buying power to make smaller strategic purchases, which could help boost earnings later in the decade.