• Pfizer reported third-quarter revenue and adjusted profit that blew past expectations.
• The company hiked its full-year outlook as its Covid vaccine and antiviral pill Paxlovid helped boost sales.
• It is a critical quarterly report for Pfizer, which is grappling with activist pressure from Starboard Value.

Pfizer on Tuesday reported third-quarter revenue and adjusted profit that blew past expectations as the company's Covid vaccine and antiviral pill Paxlovid helped boost sales.

The pharmaceutical giant also hiked its full-year outlook and now expects to book adjusted earnings per share of $2.75 to $2.95, up from its previous guidance of 2.45 to $2.65 per share. 

Pfizer now expects revenue in a range of $61 billion to $64 billion, up from a previous revenue forecast of between $59.5 billion and $62.5 billion. That includes roughly $5 billion in expected revenue from its Covid vaccine and $5.5 billion from Paxlovid.

The results are a much-needed win for Pfizer CEO Albert Bourla, who is facing new pressure from activist investor Starboard Value. The firm has a roughly $1 billion stake in the pharmaceutical company. 

Still, shares of Pfizer fell more than 2% on Tuesday.

Here's what the company reported for the third quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG: 

• Earnings per share: $1.06 adjusted vs. 62 cents expected
• Revenue: $17.7 billion vs. $14.95 billion expected

The company booked third-quarter net income of $4.47 billion, or 78 cents per share. That compares with a net loss of $2.38 billion, or 42 cents per share, during the same period a year ago. Excluding certain items, including restructuring charges and costs associated with intangible assets, the company posted earnings per share of $1.06 for the quarter.

Pfizer reported revenue of $17.7 billion for the third quarter, up 31% from the same period a year ago.

It is a critical quarterly report for Pfizer, which is cutting costs as it works to recover from the rapid decline of its Covid business and share price over the last two years. The drugmaker's shares are trading at about half of their pandemic-era high, putting the company's market cap at roughly $163 billion. 

Activist pressure

Starboard managing member Jeff Smith contends that Pfizer failed to capitalize on the windfall earned from its Covid products and, in the process, destroyed tens of billions of dollars in market value. Smith points to what he believes are management's poor investments in research and development and hefty acquisitions that have yet to be fruitful for the struggling company. 

Notably during the quarter, Pfizer withdrew from world markets a critical sickle cell drug it had acquired in a $5.4 billion deal for Global Blood Therapeutics. Starboard is calling for a massive overhaul at Pfizer, saying that the company needs to be more disciplined in its investments.

Bourla said Tuesday he and other executives met with Starboard two weeks ago, and called it "constructive and cordial." 

Pfizer agrees with some of the points Starboard raised, but has "vastly different views on many others," Bourla said. For example, Starboard challenged Pfizer's capital deployment for business development. But Pfizer believes its deals will bring significant shareholder returns, Bourla said.

Bourla pointed to changes Pfizer has implemented over the last 10 months, such as appointing new executives and separating its U.S. and international businesses.

Still, he said, "We will engage productively with our shareholders, including Starboard" and consider "all good ideas that are offered."

Meanwhile, Pfizer reiterated Tuesday it is on track to deliver at least $4 billion in savings by the end of the year. The company in May announced a multiyear plan to slash costs, with the first phase of the effort slated to deliver $1.5 billion in savings by 2027. 

Covid demand

Pfizer's third-quarter beat was fueled in part by higher demand for its Covid products.

Paxlovid, its antiviral pill, brought in $2.7 billion in sales for the quarter, up from the $202 million it posted in the year-earlier period. 

That growth is mainly due to strong demand, particularly in the U.S. during a recent wave of the virus. It was also helped by a one-time contractual delivery of 1 million treatment courses of Paxlovid to the federal government's national stockpile during the third quarter, which accounted for $442 million in revenue. 

Those results are higher than the $707.7 million in sales that analysts were expecting for Paxlovid, according to estimates compiled by StreetAccount.

"The demand for Paxlovid seems to have stabilized at the current levels and appears to be closely correlated with each wave of Covid-19," Bourla said.

The company's Covid shot booked $1.42 billion in revenue, up 9% from the same period a year ago.

Pfizer said that growth was mainly driven by the timing of stocking for the vaccine, pointing to the earlier approval of the updated version of the shot this fall compared with last year. That growth was partially offset by lower contractual deliveries and demand in international markets.

Analysts expected $1.04 billion in sales for the shot, according to StreetAccount.

Non-Covid product growth

Excluding Covid products, Pfizer said revenue for the third quarter rose 14% on an operational basis, fueled by approved cancer products from Seagen, which it acquired last year for a whopping $43 billion.

Those drugs brought in $854 million in revenue for the quarter, including $409 million from a targeted treatment for bladder cancer called Padcev as well as $268 million from Adectris, a drug that targets certain lymphomas. Pfizer completed its acquisition of Seagen in December.

Revenue also got a boost from sales of Pfizer's Vyndaqel drugs, which are used to treat a certain type of cardiomyopathy, a disease of the heart muscle. Those drugs booked $1.45 billion in sales, up 62% from the third quarter of 2023.

Analysts had expected that group of drugs to rake in $1.37 billion for the quarter, according to estimates from StreetAccount.  

Pfizer said its blood thinner Eliquis, which is co-marketed by Bristol Myers Squibb, also helped drive revenue growth during the period. The drug posted $1.62 billion in revenue for the quarter, up 8% from the year-earlier period. 

That is slightly higher than the $1.59 billion that analysts were expecting, according to StreetAccount. 

Sales of Eliquis could take a hit in 2026, however, when a new price for the drug goes into effect for certain Medicare patients following negotiations with the federal government. Those price negotiations are a key provision of President Joe Biden's Inflation Reduction Act that the pharmaceutical industry fiercely opposes.

Meanwhile, Pfizer's vaccine against respiratory syncytial virus, or RSV, saw $356 million in revenue for the third quarter. The shot, known as Abrysvo, entered the market during the third quarter of 2023 for seniors and expectant mothers who can pass on protection to their fetuses.

Analysts had expected the shot to generate sales of $255.4 million, according to StreetAccount estimates.

Last week, Pfizer's RSV shot won approval for adults ages 18 to 59 who are at increased risk for the disease – a decision that will likely significantly expand the reach of the jab in the U.S.