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Analysis of Pfizer 2011 Financial Statements

Pfizer announced a modest increase in its full year revenues in the financial year 2011. The company’s 2011 financial performance was positive despite heavy challenges in the global pharmaceutical market and due to occurrence of losses in the form of exclusive rights amounting to $5 billion.

The company’s 2011 revenue grew by 1 percent from the previous year to $67.4 billion. In that financial year the company’s domestic revenues decreased by 7 percent while at the same time its international revenues grew by 6 percent. The 6 percent growth in international revenues indicated 1 percent operational growth and 6 percent growth due to favorable foreign exchange environment. Foreign revenues accounted for 60 percent of Pfizer’s total  revenues in 2011, an increase of 3 percent in 2010 international revenues. The firm’s fourth quarter revenues that amounted to $16.7 billion, however, declined by 4 percent compared to the same period in the previous year. Pfizer attributed the decrease in the fourth quarter revenues to a 5 percent operational decline that was partially offset by a 1 percent favorable foreign exchange effect.

According to the company’s CFO, Pfizer attained its cost and expenses reduction targets primarily by merging with Wyeth a year before the anticipated time. The company also announced that it was receiving positive returns on its pipeline investment and its initiatives to improve R&D performance and its R&D culture. These efforts included introduction of new products, increased marketing submissions and approvals, and clinical data presentations. Examples of new products launched by the company in the financial year are Tofacitinib, Xalkori, and Inlyta drugs. As expressed in 2011 financial report, new products are very well positioned and are bound to generate new opportunities and enhance the firm’s future performance. Additionally, the company’s CFO revealed that the firm was developing other new drugs with a high potential of improving patients’ lives and that these drugs were in the early and middle stages of development.

Comparison of 2011 and 2010 Financial Statements

(Figures in millions of dollars except EPS)

Item

2011

2010

Absolute Change

% Change

Sales

$67,425

$67,057

368

0.55

Gross profit

52,340

51,219

1121

2.19

Net income

10,009

8,257

1752

21.22

Total assets

188,002

195,014

(7012)

-3.60

Total liabilities

105,381

106,749

(1368)

-1.28

Largest asset: short-term investments of $23,219 (million dollars)

Largest liability: long-term debt of $34,931 (million dollars)

Pfizer’s trading sign consists of the ticker symbol. The company’s stock price at 1400 hrs (GMT) was $22.63. In addition, the stock’s 52-week high was $23.30 while the corresponding low was $16.63.  Its P/E ratio over the last 12 months was 20.91.

The company pays dividends and its next dividend payment of $0.22 per share will be made on 6th of this month. Moreover, its current dividend yield is 3.86%. Further, Yahoo Finance recommends the stock a strong buy. Company’s auditors KPMG gave a positive audit report with regard to its internal controls which determine the reliability of financial statements.

Competition

Pfizer competes in the pharmaceutical and biotechnology industries. Its key competitors are Abbott Laboratories, Amgen Inc. and Apotex Inc. All these competitors are located in the United States.

Conclusion and Recommendation

From the analysis of Pfizer company stock, it is evident that it is a stable stock since it has not fluctuated much over the last year. The current price of $22.63 is near the 52-week high of the stock which stands at $23.30. Therefore, I would recommend selling the stock for those investors who hold it.

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