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Biotech / Medical : Pharma News Only (pfe,mrk,wla, sgp, ahp, bmy, lly) -- Ignore unavailable to you. Want to Upgrade?

To: Anthony Wong who wrote (925)	10/14/1998 6:37:00 PM
From: Anthony Wong	Respond to of 1722

Dow Jones: Pfizer Sees Stock Rebound Despite Disappointing 3rd-Quarter Results October 14, 1998 5:58 PM NEW YORK -(Dow Jones)- Although Pfizer Inc. disappointed Wall Street Tuesday with third-quarter earnings that missed estimates, investors appear to have forgiven the drug giant's shortfall. One reason, industry observers said, is that Pfizer's strong revenue growth and solid fundamentals outweigh the earnings miss, which wasn't "eye-popping," said Hambrecht & Quist Inc. analyst Alex Zisson. Also, much of the blow to earnings came from Pfizer's heavy spending during the quarter, a move that hurt short-term results but should yield growth in the company over the long haul. At the close of trading on the New York Stock Exchange Wednesday, Pfizer shares (PFE) were up $8.50, or 9.7%, at $96.00. Volume on the day was 11.9 million, well above the daily average of 4.1 million. The surge followed an after-hours selloff Tuesday, as investors reacted to the earnings. The stock ended down $5.50 at $87.50. After the close of the market Tuesday, Pfizer reported third-quarter earnings of 51 cents a diluted share, up 13% from a year earlier but lower than the 57 cents analysts surveyed by First Call Corp. had expected. The latest and year-ago third-quarter figures excluded unusual and nonrecurring charges. But on the top line, Pfizer's revenue from continuing operations rose 21% from a year earlier. That came even amid slowed sales of Viagra. Sales of the impotence drug dropped in the quarter to $141 million from $400 million in the second quarter. Analysts had expected a sales decline from the previous quarter, though most didn't expect the falloff to be so sharp. But even with the drop, Pfizer's product offering is still among the best in the sector, said Premal Pajwani, a senior pharmaceutical analyst for Dresdner Kleinwort Benson. "The fundamental story is still very much intact," he said. During the quarter, Pfizer's spending on research and development soared 23% from a year earlier to $550 million. Selling, informational, and administrative expenses rose 26% from a year ago. Even Pfizer conceded that its spending was high. "Our investments in selling, information and administrative expense as well as R&D continue to be heavy this quarter," Chief Financial Officer David Shedlarz said in the company's earnings press release. The spending reflected a "very deliberate decision" to fully exploit what Pfizer said were compelling short-term opportunities. Much of the spending went toward the expansion of the company's U.S. sales force. Pfizer has also started a direct-to-consumer advertising campaign in the U.S. that it expects will have a positive effect on prescription trends. Analysts said Pfizer's earnings shortfall was certainly something that could have caused investors to bid down shares of the company in after-market trading Tuesday. But they said confusion about the earnings report may have compounded the drop. One reason is that it may not have been immediately clear from the 25-page press release that the earnings shortfall was due largely to increased spending for future growth. Another reason, analysts said, is that the company surprised investors by removing all the revenue and expenses of its medical-technology businesses from the income statement for the latest and year-ago third quarters. Pfizer has sold, or has agreed to sell, each of its medical-technology businesses. The financials of these businesses are reported as discontinued operations on the income statement. In order to reflect the absence of the medical-technology group on the income statement for the rest of the year, some analysts have adjusted their Pfizer earnings estimates downward for the fourth quarter and the year. The revisions followed guidance by the company in its press release. On average, analysts appear to be lowering their estimates for the year by about 10 cents a share. For the fourth quarter, 12 of 29 analysts surveyed by First Call have revised their Pfizer estimates downward since Tuesday's earnings release. For the year, 18 of 32 analysts have made downward revisions. Also, a number of analysts surveyed by First Call - seven out of 30 - have revised their ratings on Pfizer downward. But others, including Dresdner Kleinwort's Pajwani, reaffirmed their "buy" ratings on the company. His estimate for the year has been cut to $2.00 from $2.13 a share. Of that reduction, 10 cents reflects the absence of the medical-technology group and three cents reflects higher-than-expected spending, he said. Pfizer said in its press release Tuesday that it is comfortable with 1998 earnings estimates of $1.95 to $2.00 a share, excluding unusual and nonrecurring items. Industry observers said part of Pfizer's move to increase its sales force is in anticipation of the launch of Celebra, Monsanto Co.'s (MTC) arthritis drug under expedited review by the Food and Drug Administration. Analysts have said the drug could become a blockbuster - reaping billions of dollars in sales. Pfizer will commercialize Celebra along with Monsanto's G.D. Searle & Co. unit. HKS & Co. analyst Hemant Shah said Celebra will be key to Pfizer going forward. Pajwani agreed. "I think investors' focus will shift away from Viagra now to Celebra," he said. -Melanie Trottman 201-938-5298 Copyright (c) 1998 Dow Jones & Company, Inc. All Rights Reserved.

To: Anthony Wong who wrote (925)	10/15/1998 8:03:00 AM
From: Henry Niman	Read Replies (2) \| Respond to of 1722

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