Pfizer's Double Disappointment a Good Buying Opportunity

Tickers in this article: AZN BMY MRK PFE ZTS
NEW YORK (TheStreet) -- Investors in Pfizer have taken their lumps of late. On Friday AstraZeneca the British drug manufacturer rejected a sweetened acquisition offer from Pfizer that was valued at more than $106 billion on the grounds that the amount undervalued the company. That's not surprising since AstraZeneca has a market cap of more than $101 billion.

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The second disappointment for Pfizer and its shareholders emerged before the markets opened today. The company reported sales profits fell 15% in the first quarter of 2014 on revenue of $11.4 billion. After the markets opened Pfizer fell 2.5% to less than $30 a share.

The biopharmaceutical giant has a plethora of products and brand names on which to drive earnings. These include Lyrica, the Prevnar family of products, Enbrel, Celebrex, Lipitor, Viagra, Zyvox, Norvasc, Sutent, and the Premarin family of products. Among its consumer healthcare products there are Advil, Caltrate, Centrum, ChapStick, Emergen-C, Preparation H, and Robitussin brands.

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These helped Pfizer report "Adjusted Diluted EPS" for the quarter to hit 57 cents and its "Reported Diluted EPS" of 36 cents. These EPS numbers were slightly better than analysts expected, but the 15% profit decline was worse than predicted.

This 1-year chart illustrates the key financial trends leading up to the disappointing May 5 earnings release.

PFE ChartPFE data by YCharts

The company's quarterly diluted year-over-year EPS had precipitously declined in the last quarter of 2013 while its revenue growth had been mainly flat. The 9% quarterly year-over-year decline in revenue in the first quarter of 2014 is a wake-up call offering more insight as to why its CEO Ian Read is bound and determined to acquire AstraZeneca.