Global pharmaceutical company Pfizer (NYSE:PFE) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 7.8% year on year to $13.72 billion. The company’s full-year revenue guidance of $62.5 billion at the midpoint came in 0.7% below analysts’ estimates. Its non-GAAP profit of $0.92 per share was 35.2% above analysts’ consensus estimates.
Revenue: $13.72 billion vs analyst estimates of $13.94 billion (7.8% year-on-year decline, 1.6% miss)
Adjusted EPS: $0.92 vs analyst estimates of $0.68 (35.2% beat)
The company reconfirmed its revenue guidance for the full year of $62.5 billion at the midpoint
Management reiterated its full-year Adjusted EPS guidance of $2.90 at the midpoint
Operating Margin: 21.7%, down from 31.6% in the same quarter last year
Organic Revenue rose 6% year on year (-19% in the same quarter last year)
Market Capitalization: $130.7 billion
Company Overview
With roots dating back to 1849 when two German immigrants opened a fine chemicals business in Brooklyn, Pfizer (NYSE:PFE) is a global biopharmaceutical company that discovers, develops, manufactures, and sells medicines and vaccines for a wide range of diseases and conditions.
Sales Growth
A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Pfizer’s 5.2% annualized revenue growth over the last five years was mediocre. This was below our standard for the healthcare sector and is a tough starting point for our analysis.
Pfizer Quarterly Revenue
We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Pfizer’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 18.1% annually.
Pfizer Year-On-Year Revenue Growth
We can dig further into the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Pfizer’s organic revenue averaged 11.6% year-on-year declines. Because this number is better than its normal revenue growth, we can see that some mixture of divestitures and foreign exchange rates dampened its headline results.
Pfizer Organic Revenue Growth
This quarter, Pfizer missed Wall Street’s estimates and reported a rather uninspiring 7.8% year-on-year revenue decline, generating $13.72 billion of revenue.
Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. While this projection indicates its newer products and services will fuel better top-line performance, it is still below the sector average.
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Operating Margin
Pfizer has been an efficient company over the last five years. It was one of the more profitable businesses in the healthcare sector, boasting an average operating margin of 29.4%.
Looking at the trend in its profitability, Pfizer’s operating margin of 23.4% for the trailing 12 months may be around the same as five years ago, but it has decreased by 14.7 percentage points over the last two years. This dynamic unfolded because it failed to adjust its fixed costs while demand fell.
Pfizer Trailing 12-Month Operating Margin (GAAP)
This quarter, Pfizer generated an operating profit margin of 21.7%, down 10 percentage points year on year. This contraction shows it was less efficient because its expenses increased relative to its revenue.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Pfizer’s EPS grew at an unimpressive 2% compounded annual growth rate over the last five years, lower than its 5.2% annualized revenue growth. However, its operating margin didn’t change during this time, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings.
Pfizer Trailing 12-Month EPS (Non-GAAP)
We can take a deeper look into Pfizer’s earnings to better understand the drivers of its performance. A five-year view shows Pfizer has diluted its shareholders, growing its share count by 1.7%. This has led to lower per share earnings. Taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.
Pfizer Diluted Shares Outstanding
In Q1, Pfizer reported EPS at $0.92, up from $0.82 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Pfizer’s full-year EPS of $3.21 to shrink by 6.3%.
Key Takeaways from Pfizer’s Q1 Results
We were impressed by how significantly Pfizer blew past analysts’ organic revenue expectations this quarter. We were also excited its EPS outperformed Wall Street’s estimates by a wide margin. On the other hand, its full-year EPS guidance fell short. Overall, this was a weaker quarter. The stock remained flat at $23.21 immediately after reporting.
