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It's Normal For Pfizer To Trade Down After Beating Estimates

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It's Normal For Pfizer To Trade Down After Beating Estimates
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Pfizer Inc. (NYSE: PFE) released its Q2 results before the open on Tuesday. Earnings per share and revenues came in above Wall Street EPS consensus expectations.

Pfizer reported EPS of $0.64 and revenues of $13.1 billion. Analyst consensus had an EPS estimate of $0.62 and revenues of $13.0 billion.

Pfizer beat revenue and EPS estimates for every quarter over the last two years and share prices tend to drop if the beat is not substantial. Perhaps investors have grown numb to Pfizer's consistent earnings and revenue beats.

Looking back at the last eight earnings releases:

  • Pfizer shares on average fall 0.87 percent within five days after the release if EPS beats estimates by 5 percent or less. Five reports over the last two years beat estimates by less than 5 percent, and three of those resulted in negative returns for the week.
  • Three reports over the last five years beat EPS estimates by over 5 percent, which resulted in an average of 3.57 percent average returns for the week.

"Our continued sharp focus on executing against the distinct strategies for both our Innovative Health and Essential Health businesses has delivered a strong financial performance during the second quarter as well as for the first half of 2016," said Ian Read, Chairman and CEO. "This performance was driven by all areas of the company, reflecting ongoing strength from our recent product launches and key in-line products, the contribution of legacy Hospira products, continued improvement in the revenue profile for our standalone Essential Health business, the advancement of our product pipeline and sound capital allocation choices."

At time of writing, Pfizer traded at $36.84 in Tuesday's pre-market session, down 1.26 percent.

Posted-In: Earnings Long Ideas News Movers Trading Ideas Best of Benzinga

 

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