Pfizer (PFE) Declines on Depressed Earnings

Joel Anderson  |

All told, it’s been a rough week for Pfizer.

Monday’s pre-market earnings report was not a strong one for Pfizer (PFE) , reporting slumping revenue and earnings even as the company’s most recent to purchase rival AstraZeneca (AZN) was rejected by that company’s shareholders on Friday.

The disappointing earnings report sent shares down over 2.5 percent, a significant slump for a company with a market cap approaching $200 billion. The stock was down 1.6 percent to $30.26 a share at the opening bell on the news and kept falling. Despite two brief morning rallies back to its starting point, shares had slid below $30 apiece by mid-day.

The earnings report that sent shares spiraling could be the source of serious concern for some Pfizer investors.

Revenue for Q1 declined 9 percent year-over-year to $11.35 billion, some $730 million below Wall Street expectations. Pfizer’s reported net income of $2.329 billion or $0.36 a share was a 15 percent decline from last year’s Q1 result of $2.750 billion or $0.38 per share.

Driving the slumping sales figures was the expiration of a co-promotional deal for the marketing of arthritis drug Enbrel. Also providing downward pressure on revenues was generic competition for some major drugs, most notably Lipitor.

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“Despite continuing revenue challenges due to ongoing product losses of exclusivity and co-promotion expirations, I look forward to the remainder of the year given the strength of our mid- and late-stage pipeline, the continued growth opportunities for our recently launched products as well as opportunities for upcoming product launches,” said Chairman and CEO Ian Read. “Within both of our innovative pharmaceutical businesses and our established pharmaceutical segment, I continue to see attractive opportunities to pursue profitable revenue expansion, both organically and through prudent business development.”

The decline in stock price on Monday meant Pfizer has broken through some technical barriers that could be a sign of more trouble to come. Pfizer crossed its 200-day SMA from above as a result of the sell-off, a traditionally bearish sign, as well as breaking through a rising support line that appeared to have developed in late January. The lack of an apparent bottom for Pfizer could easily result in further declines in some investors start to get skittish.

Pfizer has been beating a steady retreat this last week. The stock had previously crossed its 200-day SMA from above on April 11, but on this occasion it was paired with a quick rebound. That April 11th bottom also coincided with several technical factors that clearly indicated the stock had entered oversold territory. Pfizer’s 14-day RSI and 14-day stochastic RSI were both pushed below oversold barriers, and the stock had crossed below its bottom Bollinger band.

As such, the comeback posted over the next two weeks was somewhat predictable. It gained further fuel on April 23 when the MACD line crossed the signal line from below. However, by the time the stock hit $32 a share, approaching its 52-week high of $32.96, Pfizer appeared to be veering closer to oversold territory again.

Since hitting that mini-peak at $32 a share on April 28, the stock has fallen precipitously. Aided by concerns about the AstraZeneca buy out, broader market concerns about its industry, and now the negative earnings report, Pfizer has crossed its 9-day, 50-day, and 200-day SMAs from above, all in the last week.

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