Pfizer Inc reported better-than-expected third-quarter earnings on Tuesday, helped by cuts in costs and growing sales of recently approved cancer medicines.
The largest U.S. drugmaker said it earned $2.59 billion, or 39 cents per share in the quarter. That compared with $3.21 billion, or 43 cents per share, in the year-earlier period.
Excluding special charges of $572 million related to restructurings, asset writedowns and other costs, Pfizer earned 58 cents per share. Analysts, on average, expected 56 cents per share, according to Thomson Reuters I/B/E/S.
"I like the quarter; it was better than we expected, mainly from cost cutting and a lower tax rate," said Herman Saftlas, an analyst with S&P Capital Inc. The effective tax rate fell 0.4 percent to 27.6 percent in the quarter.
Saftlas raised his 12-month share-price target on Pfizer to $35, from $33, saying the company will report data in coming months from trials of a number of promising experimental drugs and from studies testing new uses of already marketed Pfizer drugs.
"My feeling is they are making traction on their pipeline and if they get some good readouts from these trials, we could see Pfizer shares go higher," Saftlas said.
The bright spot in Pfizer's earnings report was sales of its oncology drugs, which jumped 24 percent in the quarter to $407 million.
Oncology has become one of Pfizer's biggest priorities, with the recent introductions of Xalkori for lung cancer, Inlyta for kidney cancer and Bosulif for chronic myelogenous leukemia.
Pfizer is counting on them to become lucrative products, and is developing other cancer medicines with possibly far bigger sales potential. They include an experimental treatment for advanced breast cancer, called palbociclib, which industry analysts consider a potential blockbuster.
Xalkori sales almost doubled to $73 million in the quarter, while Inlyta sales nearly tripled to $83 million.
Global company sales fell 2 percent to $12.64 billion, hurt by generic competition for cholesterol fighter Lipitor and other medicines. Wall Street had expected $12.7 billion. Sales would have been flat if not for the stronger dollar, which lowers the value of sales outside the United States.
Sales of Pfizer's biggest product, Lyrica for nerve pain, rose 10 percent to $1.14 billion. Prevnar, a vaccine against pneumococcal bacteria that can cause pneumonia and other infections, grew 1 percent to $959 million, a moderate turnaround from a 3 percent decline in the prior quarter.
But sales of Lipitor, which lost U.S. patent protection in late 2011, fell 29 percent to $533 million, as the drug faced generics in more overseas markets. But its sales topped Wall Street expectations by almost $55 million, Jefferies analyst Jeffrey Holford said in a research note.
The largest U.S. drugmaker forecast full-year 2013 earnings of $2.15 to $2.20 per share, excluding special items, from its earlier view of $2.10 to $2.20 per share.
Shares of Pfizer were up 0.4 percent to $30.87 in morning trading on the New York Stock Exchange.