What recession? Pfizer (PFE stock) offers up healthy Q2 on covid drug outperformance

• Pfizer stock loses ground despite earnings beat.
• PFE reported an adjusted EPS of $2.04.
• Covid drugs made up about 60% of its revenue, core company only grew 1%.

Not long after second-quarter US GDP numbers emerged on Thursday morning showing that the US economy is officially in a recession, Pfizer showed it hadn't noticed. The pharmaceutical giant offered up $2.04 in adjusted earnings per share (EPS) that blew past expectations by $0.26. In other words, Pfizer beat analyst consensus by nearly 15%. Revenue then came in at $27.7 billion, which was also well ahead of forecasts by $1.5 billion.

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Pfizer stock is surprisingly down after blowing past its Q2 earnings expectations. Shares are off 4.1% to $49.44 in the first 20 minutes of Thursday's regular session. The Federal Reserve reported Q2 GDP that fell 0.9% YoY. Since this is the second consecutive quarter of decline, the US economy is officially in a recession.

Pfizer earnings and outlook: Vaccine provides shot in the arm

Pfizer's coronavirus vaccine Comirnaty and its covid treatment Paxlovid together brought in more than half of the revenue. Comirnaty had sales of $8.85 billion, and Paxlovid nearly matched it with $8.12 billion. This has been the most popular coronavirus vaccine in the world, and Centers for Disease Control estimate 355 million doses of the two-shot vacccine have been administered. For the full year, PFE now estimates it will have sales of $32 billion for Comirnaty and $22 billion for Paxlovid.

Unlike the first quarter, when it beat on adjusted EPS but missed on GAAP EPS, Pfizer reported GAAP EPS for Q2 of $1.73, which was ahead of consensus for $1.64.

The impact of the strong US dollar is very much having a negative impact on the impressive results. Pfizer issued guidance that the lower limit to full-year EPS was being raised by $0.24 and full-year revenue by $2 billion in constant currency terms. When currency fluctuations are taken into account (you know, like in the real world), Pfizer's guidance says full-year revenue will come in $3 billion below consensus and that EPS will only add $0.05 to the prior lower end of guidance (moving from $6.25 to $6.30). 

Besides the currency effect, a major drawback to the earnings was that when covid drugs are taken out of the mix, Pfizer's sales only grew about 1% YoY. Pfizer's JAK inhibitor drug saw sales fall 27% YoY, and its Chantix anti-smoking drug reduced shipments by 99%.

Pfizer stock forecast: Stuck in the middle of pattern

Pfizer stock has been trading inside a symmetrical triangle since February. The apex of the wedge is around $49, so PFE shares have been circling that price all year. To break out of the wedge, PFE stock must close on the weekly chart below above $52.62. The bottom trend line of the wedge structure is at $46.85 at the moment.

The Moving Average Convergence Divergence (MACD) is barely moving. Look for the MACD to wake up before there is any real movement. For now, it looks like Pfizer stock will search for support at the lower trend line near $47.

PFE weekly chart