Was It Foreseeable For Pfizer To Lower Its 2015 Guidance?

Pfizer Inc. (NYSE: PFE) came out with better-than-expected fourth quarter earnings results on Tuesday. However, the earnings forecasts of 2015 provided by the company were way below Wall Street expectations. The company cited strengthening dollar and patent expiration as the reasons behind lower guidance.

Raghuram Selvaraju, managing director of equity research for healthcare at MLV & Co, was on CNBC to discuss why things are not as bad as they seem for Pfizer.

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Predictability

Selvaraju explained that he felt Pfizer's results “would probably have been predictable.”

He continued, “For Pfizer to lower their guidance for 2015 in the wake of the stronger dollar, which is something that people have been aware of for quite some time” would have been a foreseeable outcome.

“But organizationally, operationally, we think that Pfizer looks to remain strong and we continue to believe that there’s lots of leverage that the company can employ to continue to manufacture at least some traction on the earnings front.”

What's Happening

Selvaraju went on, “They continue to slim down their primary care-facing sales force. They continue to launch specialty drugs -- the most recent example of which was the specialty oncology ibrance or palbociclib. So, we definitely think that Pfizer is re-orienting itself in the right way. Some more specialization, spinning off non-core assets and we continue to expect them to do the same going forward.”

Advent Of New Products Seems Slow

Selvaraju explained that the frequency of new products being produced depends on perspective. “Longer-term, we think that the immuno-oncology pipeline is going to give Pfizer some strength.”

He concluded, “And [regarding] the near-term, we definitely believe that Pfizer -- unlike some of its brethren in the big pharma space -- is going to continue to prefer to go big on the mega merger or on the acquisition front.”