Trading at calculated fair value
Shares of Pfizer, $204 billion biopharmaceutical company, recently fell nearly 13%. The company recently reported its fourth quarter and full year results.
In 2017, Pfizer reported -1% revenue decline and nearly tripling of profits. A little more than $9 billion was added to Pfizer’s bottom line brought by recent tax reform. Nonetheless, income before taxes still rose a healthy 47% from 2016.
“Pfizer had a strong year in 2017, delivering solid financial results, advancing several significant pipeline programs and enhancing shareholder value with prudent capital allocation decisions. Regarding our revenue performance in 2017, Pfizer Innovative Health was driven by continued strength from several anchor brands, including Ibrance, Eliquis and Xeljanz — all of which currently have market-leading positions with many years of patent protection remaining. Pfizer Essential Health generated strong operational revenue growth in emerging markets and in our Biosimilars portfolio but was negatively impacted by the HIS divestiture, the expected impact of product losses of exclusivity and legacy Hospira product shortages in the U.S.
“In 2017, we received ten approvals from the FDA, significantly more than Pfizer has achieved in any year in the past decade. Building on these achievements, during 2018 we look forward to important regulatory decisions and clinical data readouts across our pipeline that will drive the next wave of innovation at Pfizer.
“I believe our capital allocation decisions in 2017 enhanced shareholder value. In addition to investing in our business, we also returned $12.7 billion directly to shareholders through a combination of dividends and share repurchases and we decided to explore potential strategic alternatives for our Consumer Healthcare business. We remain on track to make this decision, which could include everything from a full or partial separation to ultimately deciding to retain the business, during 2018.
“I believe our current management and business structure, the tireless dedication of our colleagues and the strong culture we have nurtured position Pfizer especially well for continued success.”
Ian Read, Chairman and Chief Executive Officer
Balance sheet and cash flow statements were not available at the time of writing.
Pfizer experienced decline in some of its products such as Viagra (-30%; $358 million), Prevnar (-2%; $117 million), Enbrel (-16%, $457 million), Lyrica (-31%; $248 million), Vfend (-29%; $169 million), Pristiq (-59%, $169 million), Zyvox, and Revatio.
Pfizer also sold its Hospira Infusion Systems for $900 million in 2016-2017 period.
Meanwhile, Pfizer had total debt of $44 billion (0.72x debt-equity) and $60.8 billion in book value as of September.
In the past three fiscal years excluding the recent, Pfizer allocated $29 billion in financing activities and generated $42 billion in free cash flow.
Analysts have an average price target of $40.55/share vs. $34.20 at the time of writing. Conservative calculations gave a per share figure of $33.60.
Disclosure: I have shares in Pfizer