Feb. 1, 2011, 12:10 p.m. EST
Pfizer’s profit boosted by tax gain
Drug giant plans to buy back stock, raise dividend
By Val Brickates Kennedy, MarketWatch
BOSTON (MarketWatch) — Pfizer Inc. reported a markedly higher fourth-quarter profit early Tuesday, its bottom line boosted by a $2 billion tax-related accounting gain, and issued a better-than-expected 2011 revenue forecast.
The pharmaceutical giant also announced plans to buy back up to $9 billion of its shares and raise its dividend.
Shares of Pfizer /quotes/comstock/13*!pfe/quotes/nls/pfe (PFE 19.29, +1.07, +5.87%) jumped 4% in late-morning trading.
The New York-based industry juggernaut said it earned $2.89 billion, or 36 cents a share, compared with $767 million, or 10 cents a share, in the year-earlier period.
This year’s quarter featured a $2 billion tax-related gain, along with lower restructuring and merger costs associated with its takeover of rival Wyeth, which it acquired in 2009 for $68 billion in an effort to boost both its product portfolio and pipeline.
Excluding various items, Pfizer would have posted adjusted earnings of 47 cents a share versus 49 cents.
Revenue rose to $17.6 billion from $16.5 billion. Sales of legacy Wyeth products contributed $2.3 billion to the top line.
On average, analysts surveyed by FactSet Research expected Pfizer to earn 46 cents a share on revenue of $16.99 billion.
Pfizer said it now sees 2011 adjusted earnings of $2.16 to $2.26 a share and revenue of $66 billion to $68 billion.
Analysts were expecting 2011 earnings of $2.30 a share on revenue of $66.5 billion, according to FactSet
Sales of Lipitor, Pfizer’s top-selling medication, fell 17% to $2.63 billion. The product, which is already facing generic competition overseas, is expected to lose U.S. patent protection later this year.
In an effort to address that impending shortfall, Pfizer has been on an acquisition binge, with Wyeth being its priciest purchase. The company is also in the process of buying specialty drug maker King Pharmaceuticals Inc. /quotes/comstock/13*!kg/quotes/nls/kg (KG 14.24, -0.01, -0.04%) for about $3.6 billion.
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Pfizer also said its board has approved a $5 billion stock buyback on top of an existing $4 billion authorization. The drug maker plans to repurchase about $5 billion of its shares in 2011 alone. As of the end of 2010, Pfizer said it has repurchased about 60 million shares.
The company added that it intends to raise its dividend, more in line with its once-coveted level after having slashed it to help pay for the 2009 mega-merger with Wyeth.
“While the dividend level remains a decision of the board and will continue to be evaluated in the context of future business performance, barring significant unforeseen events, we continue to target a dividend payout ratio comparable to the current industry average of approximately 40% in about three years,” said Ian Read, Pfizer’s new chief executive officer, in a statement.
In December, Pfizer surprised the market by announcing that then-CEO Jeffrey Kindler was stepping down due to personal reasons. He was succeeded by Read, who had served as Pfizer’s head of global pharmaceutical operations.
Val Brickates Kennedy is a reporter for MarketWatch in Boston.
