By Divya Grover
(Reuters) - Pfizer Inc (N:PFE) forecast 2018 profit and revenue well ahead of analysts' estimates on Tuesday as it expects to benefit from reduced tax rate following the recent changes to the U.S. tax code, and recorded an $11 billion gain from the overhaul.
The company's shares, which rose nearly 5 percent on Friday and hit their highest level since 2002 on Monday, fell 3 percent to $37.82 in morning trading.
The drugmaker also beat fourth-quarter profit and revenue estimates on strong demand for its pneumonia vaccine Prevnar and rheumatoid arthritis drug Xeljanz.
Pfizer said it would invest about $5 billion in the United States over the next five years and pay about $15 billion in taxes over eight years to bring funds kept overseas back to the United States under the new tax laws.
The above consensus fourth-quarter results are "largely irrelevent" in the context of Pfizer's strong full-year forecast, driven by the "dramatically improved" 17 percent tax rate in 2018 and a strong currency tailwind, Leerink analysts said.
"Most investors were already assuming strong guidance in the wake of AbbVie Inc's (N:ABBV) recent guidance," the analysts said.
Pfizer said its 2018 forecast reflected a full-year contribution from the consumer healthcare business, which the company plans to divest or spin-off this year.
The drugmaker has been under immense pressure from investors and Wall Street to pull off a large deal that could help reignite its growth, which has been reliant on drugs that are close to generic pressure following patent expirations.
"We believe that Pfizer has the financial flexibility to add to its product portfolio through potentially sizable acquisitions, particularly now that there is clarity on U.S. tax reform," Edward Jones analyst Ashtyn Evans said.
Pfizer booked a gain of $11.34 billion from the new tax law, leading to a surge in fourth-quarter profit to $12.27 billion, or $2.02 per share.
Excluding the tax gain and other items, the company earned 62 cents per share. Revenue rose marginally to $13.70 billion.
Analysts on average were expecting a profit of 56 cents per share and revenue of $13.68 billion, according to Thomson Reuters I/B/E/S.
Prevnar raked in sales of $1.53 billion, up 8.3 percent from the year-ago quarter, while Xeljanz jumped 47.5 percent to $410 million. Both the drugs significantly beat consensus estimates, compiled by Barclays (LON:BARC).
However, sales of the company's breast cancer treatment, Ibrance, rose 11.4 percent to $716 million, but missed estimates of $978 million.
Pfizer forecast full-year adjusted earnings per share of between $2.90 and $3 and revenue of $53.5 billion to $55.5 billion.
Analysts on average were expecting a profit of $2.78 per share and revenue of $53.88 billion.