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Pfizer (PFE Free Pfizer Stock Report), the world's largest drugmaker and a Dow-30 component, reported first-quarter earnings of $0.38 a share, versus $0.24 in the comparable period of 2012. Adjusted earnings, to exclude one-time charges and other nonrecurring items, came in at $0.54 a share, versus $0.38 in 2012. While profits compared favorably on a year-over-year basis, revenue fell 9%, due to a slowdown in emerging markets and lagging demand for the company's third-largest product, Prevnar 13. With first-quarter results not quite living up to expectations, management trimmed its full-year earnings guidance from $1.50-$1.65 a share, to $1.44-$1.59, and its adjusted guidance from $2.20-$2.30 a share, to $2.14-$2.24 a share. Naturally, Wall Street seemed less than enthused with the announcement, as shares of Pfizer were down more than 3% in early morning trading.

In the March period, total revenue declined 9%, year over year, to $13.5 billion, well below our $14.2 billion estimate. Management attributed the weak showing to the continued fallout of its once-prominent Lipitor drug (sales declined 55%, to $626 million), a shift in purchasing patterns for Prevnar 13 (down 10%, to $846 million), and lower-than-expected overall sales in emerging markets due to reduced government spending on Prevnar 13 and Enbrel. This was partially offset by double-digit growth in Pfizer's new top-grossing product Lyrica, which grew 12%, to $1.1 billion. All told, management scaled back its 2013 top-line guidance from $56.2 billion-$58.2 billion, to $55.3 billion-$57.3 billion.

With existing product sales slumping in several key markets, Pfizer will be looking to recently launched products and its pipeline to help pick up the slack. The two top candidates at this time are Xelijanz (rheumatoid arthritis) and Eliquis (stroke prevention), both of which are expected to have multi-billion dollar-a-year potential. Xelijanz was approved in November, and Eliquis in December, and both are now widely available in most major markets. Continued growth of top-selling Lyrica will also be essential in bolstering the top line in the coming quarters.

Despite the weak start to the year, our overall investment thesis remains largely unchanged since our April 12th report. Though we have lowered our 2013 earnings guidance slightly in adherence with management's guidance, we believe Pfizer remains a safe bet within the pharmaceutical space due to its solid fundamentals, sizable share in most markets, and impressive track record. A strong existing product base, coupled with an encouraging late-stage pipeline should help the company better deal with recent patent losses going forward. For investors seeking an attractive and well-defined total return play with relative stability, good-yielding Pfizer stock has an above-average dividend yield and a top rank for Safety (1). The company's Financial Strength (A++) is also outstanding.

About The Company:Pfizer is a major producer of pharmaceuticals, hospital products, consumer products, and animal health lines. Important product names include Norvasc (cardiovascular); Zoloft (antidepressant); Zithromax (antibiotic); Lipitor (cholesterol); Aricept (Alzheimer’s); Cardura (cardiovascular); Diflucan (antifungal); Zyrtec (antihistamine); Viagra (impotence); and Celebrex (rheumatoid arthritis and osteoarthritis). International sales accounted for about 61% of total sales in 2012.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.