Pfizer Q2 FY2022 Earnings Report Preview: What to Look For

Pfizer Inc. (PFE) has seen tremendous growth in its profits and revenue in recent quarters as demand for its COVID-19 vaccine has surged. This growth has been slowing, but is likely to remain strong thanks to ongoing use of Pfizer's vaccine for boosters and other treatments. The U.S. government agreed to purchase up to 105 million doses for the fall booster season in a deal worth $3.2 billion to Pfizer. Rising COVID-19 cases in recent quarters have also boosted sales of Paxlovid, Pfizer's oral antiviral treatment for COVID-19.

Investors will be watching to see if Pfizer can maintain its strong financial performance when it reports earnings on July 28, 2022 for Q2 FY 2022. Analysts predict strong growth in both adjusted earnings per share (EPS) and revenue, although both are expected to increase at a decelerating pace relative to the last several quarters.

Pfizer, in collaboration with partner Germany-based BioNTech SE (BNTX), was the first company to receive emergency use authorization (EUA) from the FDA for its vaccine. The drug is marketed as Comirnaty. In another first, Pfizer's Paxlovid was the first oral antiviral treatment of COVID-19 to receive EUA, gaining the FDA's approval in December 2021.

Pfizer stock has significantly outperformed the broader market over the past 12 months. During that period, Pfizer shares only lagged behind the market for a brief period in October 2021. Following that dip, shares rose dramatically through December of last year before falling until March 2022. Since March, Pfizer shares have swung in a wide trading range, although consistently ahead of the market. As of July 26, Pfizer stock has provided a 1-year trailing total return of 29.3%, well above the S&P 500's return of -11.3%.

Pfizer Earnings History

Pfizer's adjusted EPS has skyrocketed in the past several quarters, propelled by the company's COVID-19 vaccine and related offerings. A look at recent Q2 adjusted EPS figures illustrates this trend. Adjusted EPS for Q2 FY 2018, prior to the pandemic, was $0.78. Although adjusted EPS dropped at the start of the pandemic to $0.62 in Q2 FY 2020, it surged ahead to $1.06 in Q2 FY 2021, following the FDA's EUA for Pfizer's vaccine in December 2020. Now, analysts expect adjusted EPS of $1.68 for Q2 FY 2022. Still, adjusted EPS growth has slowed over the past three quarters, from 115.5% in Q3 2021 to 71.6% YOY in Q1 2022. And analysts predict further slowing to 58.7% YOY growth for Q2.

Pfizer's revenue has a very similar trajectory. Although revenue declined YOY for six consecutive quarters, from Q2 FY 2019 through Q3 FY 2020, starting in Q4 FY 2020 is has grown each quarter. Growth accelerated from 11.8% YOY for Q4 FY 2020 to as high as 134.5% for Q3 FY 2021. It slowed over the next two quarters, rising 76.8% YOY in Q1 of this year. Analysts expect growth to slow further to 34.4% YOY for Q2 FY 2022.

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As Pfizer's products related to COVID-19 see increasing authorization by regulators, the company could benefit from additional sales. In June, the FDA granted EUA to Pfizer's COVID-19 vaccine for use in children as young as six months of age. Pfizer has also submitted in June a New Drug Application for approval by the FDA for Paxlovid. On July 8, the FDA approved the company's request to supplement its Biologics License Application for Comirnaty to include use in adolescents age 12 through 15 years for active immunization.

While these and similar developments could push Pfizer's sales of higher into the future, the company faces new potential rivals. For instance, in late July, China's drug regulator granted approval on a conditional basis to China-based biotech firm Genuine Biotech for use of its HIV drug Azvudine in the treatment of COVID-19. As a locally produced drug, Azvudine a competitive advantage in China, the world's second most-populous nation.