The stock market had a nice break on Monday, but Tuesday morning didn’t seem to have much catching up to do on Wall Street. Rising interest rates and worries about what the Federal Reserve might do with monetary policy later this week weighed on investor sentiment. From 7:30 a.m., futures on the Dow Jones industry average (^DJI 0.00%) fell 148 points to 32,832. S&P500 (^GSPC 0.57%) Futures were down 19 points to 4,132 during Nasdaq Composite (^IXIC 0.00%) Futures were down 65 points to 13,008.
Some of the giants of the investment universe are releasing their latest financial results this week and Tuesday morning’s shortlist included some familiar names. Both Pfizer (PFE -1.49%) and bp (BP 0.49%) have had a lot for them lately, but only one of them moved higher on Tuesday morning after telling investors how their companies had performed in the first quarter of 2022.
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Pfizer tries to keep the world in order
Pfizer shares fell less than 1% in premarket trading on Tuesday morning. The drugmaker’s first-quarter results were generally solid, but many investors were heavily focused on Pfizer’s vaccine and treatment options for COVID-19.
Overall, Pfizer continued to get a big boost from its Comirnaty vaccine and antiviral Paxlovid therapy. Revenue for the first quarter rose 82% year over year to $25.7 billion. But excluding the contributions from the two COVID-19-related products, sales would have only increased by 2%. Earnings were also significantly higher, rising 72% year over year to $1.62 per share on an adjusted basis.
The real question going forward is to what extent Pfizer’s financial results will normalize as the pandemic progresses. Vaccines accounted for nearly 60% of Pfizer’s total sales, and a drop in that number would result in a devastating drop in sales. Still, Pfizer expects sales to be between $98 billion and $102 billion in 2022, suggesting that pandemic-related products still play a key role for the company.
Still, higher expenses are also hitting Pfizer, leading to a slight $0.10 cut in full-year earnings guidance to a new range of $6.25 to $6.45 per share. That still implies a price-to-earnings ratio of less than 8, reflecting the likelihood that future earnings will fall if Pfizer can’t replace all of the money it made from Comirnaty and Paxlovid.
BP looks energetic
Meanwhile, shares of BP rose nearly 5% Tuesday morning. The oil giant reported a massive loss related to its exit from its holdings in Russian energy company Rosneft, but strong operating results reflect the current benign conditions across the energy industry.
BP’s numbers were staggering. Total revenue rose 43% to $49.3 billion as crude oil and natural gas prices soared. However, the company posted a loss of $20.4 billion. This resulted largely from a $25.5 billion pre-tax charge related to BP’s decision to divest its nearly 20 percent stake in Rosneft and its other business relationships in Russia. Adjusted for that number, however, underlying replacement cost profit rose more than 50%, driven by oil and gas trading efforts, higher price realizations for its energy products, and more favorable refining conditions.
Longer term, BP has been working to strengthen its balance sheet, and those efforts were evident during the quarter. The energy giant reduced its net debt to $27.5 billion, and that left enough capital for BP to announce a $2.5 billion share buyback program.
The Russian invasion of Ukraine was costly for BP, but benign conditions in energy markets are cushioning the blow. Investors are now hoping that the oil major can finally stage a more convincing recovery and catch up with its peers with stronger gains.
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