Pfizer's 2024 Q1 earnings report interpretation: Revenue continues to grow quarter-over-quarter, overall performance exceeds expectations

On Wednesday, May 1st, before the U.S. stock market opened, pharmaceutical giant Pfizer released its Q1 2024 earnings report, reporting revenue of $14.88 billion, down 20% year-over-year but better than the expected $14.01 billion.$Pfizer(PFE.US)$Dow Jones Industrial Average(.DJI.US) $S&P 500(.SPX.US) $NASDAQ Composite Index(.IXIC.US) $Hang Seng Index(00HSI.HK) $Eli Lilly(LLY.US) $Merck(MRK.US)

1. Summary of Personal Views

1. Pfizer's recent performance has been relatively flat, with a significant drag from the decline in COVID-related products, but the sequential growth trend is decent, and the overall performance this quarter was better than expected.

2. Objectively speaking, Pfizer's revenue and profitability have been significantly impacted by the gradual decline in the COVID drug market. The aftermath of this market shift will require a considerable amount of time for Pfizer to adapt and recover, undoubtedly testing investors' patience.

3. From a stock price perspective, Pfizer is still in a long-term downtrend, so caution is advised when considering buying.

Overall, Pfizer's recent performance has been significantly affected by the decline in the COVID drug market. Although the sequential growth trend is acceptable, the overall performance remains flat and below expectations. The challenges brought by this market shift will require the company a considerable amount of time to adapt and recover, testing investors' patience. Additionally, given Pfizer's long-term downtrend, investors should remain cautious when considering buying.

2. Financial Analysis: Sequential Revenue Growth Continues, Overall Performance Beats Expectations

In terms of revenue, Pfizer reported Q1 revenue of $14.88 billion, down 20% year-over-year but better than the expected $14.01 billion, with a relatively stable sequential improvement trend over recent quarters. However, excluding COVID-related products, revenue grew 11% year-over-year this quarter.

In terms of profitability, Pfizer's Q1 net profit was $3.12 billion, compared to $5.54 billion in the same period last year. Although still declining, it has improved significantly compared to the substantial losses in the previous two quarters. Adjusted EPS was $0.82, also better than the expected $0.52. The continued decline in revenue remains the primary drag on profitability.

3. Operational Analysis: COVID Products Remain Weak, Non-COVID Products Perform Slightly Better, Guidance Raised

1. COVID Products Continue to Underperform

Pfizer, a star in the pharmaceutical industry during the pandemic, achieved tremendous commercial success with its vaccines and drugs. However, as the pandemic comes under control and vaccine demand stabilizes, Pfizer's performance appears lackluster. In contrast, other pharmaceutical companies like Eli Lilly have seen their earnings and stock prices double due to the booming weight-loss drug market. Merck and AbbVie, while not achieving Pfizer-level profits during the pandemic, have shown significant improvement in recent performance, with their stock prices exhibiting steady growth.

For Pfizer, the pandemic was undoubtedly its peak. Now, its declining performance and stock price have become the focus of market attention. The primary reason is that revenue from non-COVID drugs remains relatively limited, creating a stark contrast with its high stock price. This dilemma is not only the main challenge Pfizer will face in the near future but also the market's biggest concern about its prospects, leading to a sustained downtrend in its stock price.

Specifically, Pfizer's Comirnaty vaccine revenue this quarter was $354 million, a staggering $2.7 billion (88%) decline year-over-year. This sharp drop is mainly due to reduced contract deliveries, lower demand in international markets, and declining sales in the U.S. For Paxlovid, revenue this quarter was $2 billion, down $2 billion (50%) year-over-year, also due to reduced contract deliveries in most international markets and the U.S. as sales transitioned to the traditional commercial market, as well as reduced demand in China following a non-recurring surge in Q1 2023.

2. Development of Non-COVID Drugs

Pfizer is currently facing unprecedented challenges, especially as competition in the COVID vaccine and drug market stabilizes. To overcome this, the company must actively pursue growth in non-COVID drugs. This quarter's results show some positive progress in this strategy, with non-COVID drugs becoming a key driver of the better-than-expected revenue growth.

Specifically, Pfizer's operational income growth in Q1 2024 was decent. Vyndaqel performed particularly well, with global operations growing 66%, mainly due to strong uptake of the ATTR-CM indication worldwide, especially in the U.S. and Europe. Vyndaqel has demonstrated significant efficacy in treating specific types of cardiomyopathy, earning widespread recognition from doctors and patients. Additionally, Eliquis's global business grew 10%, driven by continued adoption of oral anticoagulants and increased market share for non-valvular atrial fibrillation indications. Despite challenges from loss of exclusivity and generic competition in international markets, Eliquis has maintained market favor due to its excellent efficacy and safety. Abrysvo, Prevnar, and other drugs also performed well, as shown in the data below.

3. Guidance Raised

As mentioned earlier, based on the improved performance this quarter, Pfizer's management has raised its full-year guidance. Specifically, the company reaffirmed its 2024 revenue guidance of $58.5 billion to $61.5 billion and raised its adjusted diluted EPS guidance to $2.15 to $2.35.

This guidance revision reflects Pfizer's ongoing efforts and success in non-COVID drugs. Although COVID products brought significant profits in recent years, Pfizer is not resting on its laurels but actively seeking new growth drivers to adapt to future market changes.

However, for small investors like us, risks remain high. Pfizer will need considerable time to fully fill the gap left by the decline in COVID-related products, requiring greater patience and confidence in our investment.

This article is a personal interpretation of the earnings report, reflecting my thoughts within my capabilities. Feedback is welcome. Additionally, this article does not constitute investment advice, and readers are encouraged to think independently.