Read Zacks_Analysts' blog in RSS
July 24, 2009
Share This
On July 23, 2009 Wyeth Inc. (WYE) reported financial results for the period ending June 30, 2009. Revenue came in at $5,695 million, compared to our and the Street’s estimates of $5,620 million and $5,580 million, respectively. Revenue was down 4% on a reported basis but up 2% excluding the impact from foreign exchange (Fx).
Revenues were driven by products like Prevnar and Enbrel. Prevnar sales came in at $783 million, up 13% y-o-y (up 24% excluding Fx). We remain bullish on the future prospects for the vaccine.
Enbrel, which is partnered with Amgen (AMGN), contributed $736 million, up 6% (up 21% excluding Fx).
Enbrel is facing tough competition from J&J’s (JNJ) Remicade and Abbott’s (ABT) Humira. Besides this, J&J has two other autoimmune compounds drugs, Stelara and Simponi, which could provide significant competition. Nutritionals grew 1% (+9% excluding Fx) to $436 million.
Meanwhile, HRT franchise sales, consisting of Premarin and PremPro, declined 5% to $257 million. We expect sales to continue to contract at a low-to-mid single digit rate going forward.
Effexor revenues also continued to decline – Effexor XR faces stiff competition from Forest Lab’s (FRX) Lexapro, Eli Lilly’s (LLY) Cymbalta and a slew of generic drugs. Second quarter sales came in at $772 million, down 22% at constant currency. We expect sales to continue to fall in 2009 as patients switch to cheaper generics and Wyeth pushes its next generation and less expensive product, Pristiq.
Operating expenses declined during the quarter mainly due to lower SG&A expenses. SG&A spend fell 9% primarily due to cost savings related to the company's productivity initiatives. Meanwhile, increased clinical activity led to a 6.5% increase in R&D expense.
Adjusted EPS came in at $0.98 (+8% y-o-y). EPS was substantially ahead of our estimate of $0.85 due to slightly stronger than forecast revenue and significant income from Fx hedges.
Management raised adjusted EPS guidance for the full-year 2009 to $3.48 - $3.58 (previous guidance of $3.33 - $3.53). We note, however, that roughly $0.13 of the $0.15 increase in EPS guidance was realized in the second quarter, the majority of which we attribute to Fx hedges which are not a fundamental part of the business.
We expect sales to decline 3% in 2009 including the impact of Fx headwinds. We look for EPS of $3.56 in 2009, an increase of 1%, supported by the 8% gain realized in the second quarter. Pfizer’s (PFE)acquisition of Wyeth is scheduled to close in the third or fourth quarter of 2009. We maintain our Hold rating on Wyeth with a $50 price target.
Read the full analyst report on "WYE"
Read the full analyst report on "AMGN"
Read the full analyst report on "JNJ"
Read the full analyst report on "LLY"
Read the full analyst report on "PFE"
Read the full analyst report on "FRX"
Zacks Investment Research