Stock Watch: Paradoxical Q1 Earnings Reactions

Sales Growth Is Usually Rewarded With Stock Price Appreciation

  
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Falling sales are not typically welcomed by investors, while good revenue growth is prized. The first-quarter earnings season provided exceptions to this rule, and then there was Amgen.    

Stock Watch Image, Andy Smith
ANDY SMITH OFFERS A LIFE SCIENCE INVESTOR'S PERSPECTIVE ON BIOPHARMA BUSINESS

When Pfizer Inc.* reported its first-quarter financial results, its stock price closed up by 3% compared with the less than 1% gain by the NYSE Arca Pharmaceutical Index (DRG). This was despite Pfizer reporting first-quarter revenues that fell by 20% on the first quarter of 2023. In the last year, Pfizer’s stock price has fallen by 22% compared with the DRG’s 17% rise in a divergence that started in the summer of 2023 when sales of its products to treat and prevent COVID-19 cratered. So while investors’ endorsement of Pfizer’s first-quarter results may have come as a welcome relief to the company, its logic was obscure.

Pfizer’s first-quarter revenue comparison with the same quarter a year earlier was contrasted by a rise by 4% on the...

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