Despite higher sales numbers, Pfizer’s third quarter profits have plummeted 38 percent.
Despite higher sales numbers, Pfizer’s (NYSE:PFE) third quarter profits have plummeted 38 percent. In response, the drug maker is scaling back the top end of its annual profit forecast and halting development of a new cholesterol medication. As for investors? Many are selling off shares.
Premarket trade on Tuesday saw Pfizer’s stock price fall 1.48 percent.
So why has Pfizer falling short of its projections? Part of the blame may be placed on acquisition costs. The pharmaceutical giant has been on a buying spree as of late, picking up Medivation, Bamboo Therapeutics, Anacor and AstraZeneca’s small molecule anti-infective business this year alone.
The company also intended to merge with Allergan, a deal that fell through in early April 2016 as a result of intervention from the US federal government.
But acquisitions aren’t all to blame. The company’s production, marketing and research costs have risen as well, which contributed to lower than projected Q3 profits.
On November 1, 2016, Pfizer announced a net income of $1.32 billion or $0.21 per share. At this time last year, those numbers were significantly higher: a net income of $2.13 billion, which translates to $0.34 per share.
Pfizer is now decreasing its projected profits for 2016. Prior to the Q3 results, they predicted an EPS between 2.38 and 2.48. Today, the drug company has narrowed that range, saying it will be between 2.38 and 2.43.
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Securities Disclosure: I, Chelsea Pratt, hold no direct investment interest in any company mentioned in this article.