Pfizer Inc. Earnings: Can the Big Pharma Stock Keep Recovering?

Pfizer will release its quarterly report on Tuesday, and it has seen its stock perform extremely well over the past quarter, hitting levels not seen in almost a decade. Yet even as competition against Merck , AbbVie , and other big pharmaceutical companies starts to heat up, Pfizer is contemplating some big strategic moves that could change the way it does business in the future.

Like many of its peers, Pfizer has had to deal with an extreme patent cliff in recent years. That has forced the company to look in new directions to develop potential replacements for blockbuster drugs that have lost patent protection. Fortunately, Pfizer has had considerable success in those efforts, but investors still question whether they'll be enough to hold Merck, AbbVie, and dozens of other competitors at bay. Let's take an early look at what's been happening with Pfizer over the past quarter and what we're likely to see in its report.

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Stats on Pfizer

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What's next for Pfizer earnings?
In recent months, analysts have gotten a little less certain about Pfizer earnings, cutting fourth-quarter estimates by a penny per share and full-year 2014 projections by $0.03 per share. The stock has come off its highs and has been essentially flat since late October.

Pfizer's third-quarter earnings report shows the extent to which the pharma giant has gone to support its profitability despite key patent-cliff revenue losses. Extensive cost-cutting paid off with a modest earnings beat, and even though sales of off-patent Lipitor fell substantially, patent-protected drugs like Lyrica and Celebrex posted solid gains. More encouragingly, cancer-drug sales jumped 24%, with lung-cancer treatment Xalkori seeing sales almost double and kidney-cancer drug Inlyta almost tripling its sales. Yet even with those results, Pfizer cut its guidance for the full year.

One problem that Pfizer has had lately is that new drugs have had slower launches than the company had hoped. For instance, with rheumatoid arthritis drug Xeljanz, Pfizer faces competition from AbbVie's Humira, even though Humira is injected while patients take Xeljanz in pill form. Similar issues have plagued its more recent Eliquis launch from late 2012.

Patent-cliff issues will also still face Pfizer in the future. Last month, the company settled a dispute with Teva Pharmaceutical by allowing the generic drugmaker to make a version of its key Viagra drug beginning in late 2017. The agreement will pay Pfizer an undisclosed amount for the rights, but it could also end up hurting Pfizer's branded Viagra sales when the Teva version becomes available almost two and a half years before Viagra's 2020 expiration of U.S. patent exclusivity.

One issue investors are following is whether Pfizer will take further steps to restructure its business. With plans to split up its commercial operations to separate generics from branded drugs, some believe that Pfizer will eventually spin off or sell its generics unit to focus on proprietary drug development. That would be consistent both with its own past trend as well as those of many of its peers, with Johnson & Johnson being the obvious example as it considers the sale of its Ortho diagnostics unit to focus more on pharmaceuticals.

In the Pfizer earnings report, watch to see whether the drugmaker is able to boost sales growth of its key drug offerings. Moreover, if the company releases details about its future corporate strategy, it could make investors feel more comfortable about where the stock is headed both in the near future and for years to come.

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