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A.G. Edwards
Equity Research - HEALTH CARE/DRUGSJanuary 23, 2002 PFE REPORTS 4Q01 AND 2001 EPS IN LINE WITH EXPECTATIONS, ABOVE
GUIDANCE, AND STRONG REVENUE GROWTH
----------------------------------------------------------------- Pfizer Inc. (PFE 41.80 - NYSE)
Strong Buy/Conservative
----------------------------------------------------------------- -----------------------------------------------------------------PFE reported diluted and adjusted fourth quarter and 2001earnings-per-share of $0.34/+26% and $1.31/+28%, respectively.
These results met A.G. Edwards' and consensus estimates and $0.01above raised guidance.
Total company revenues increased a strong 12% during the quarterdue to volume.
This performance indicates that PFE has the ability to deliver double-digit top-line growth.
to deliver top-line growth in this range through 2004.
Pharmaceutical revenues exceeded our expectations.
franchises -- Lipitor, Norvasc, Zithromax, Zoloft, Neurontin,Zyrtec, Viagra and Alliance Revenues (Aricept and Celebrex) --allperformed very well.
Overall, we believe that PFE had a strong fourth quarter.
a period when many large capitalization pharmaceutical companiesfaltered, PFE continued its steady leadership in thepharmaceutical industry.
In addition, PFE continues to support a strong outlook for thefuture, including double-digit revenue growth for 2002-2004, 2002earnings-per-share of $1.56-$1.60 and 15% or better earnings-per-share growth for 2003-2004.
In line with PFE's guidance, we continue to have highexpectations for PFE going forward.
produce earnings-per-share growth in excess of 20%.
point, we expect PFE's strong pipeline to spur top-tier earningsgrowth.
For the above reasons, we continue to rate PFE STRONGBUY/CONSERVATIVE.
------------------------------------------------------------ PFE reported diluted and adjusted fourth quarter and 2001earnings-per-share of $0.34/+26% and $1.31/+28%, respectively.
These results met A.G. Edwards' and consensus estimates and $0.01above raised guidance.
Overall company revenues increased a strong 12%.
missed its original 2001 double-digit top-line growth target duein large part to the negative impact of the strong dollar.
However, PFE did meet its revised guidance of 9% top-line growthfor 2001.
Robust revenue growth during the fourth quarter of 2001 suggests that PFE is moving toward its goal of double-digitrevenue growth for 2002.
Not surprisingly, volume gains accounted nearly all of PFE'srevenue growth.
In fact, volume growth overcame a negative impact from weakness in foreign currencies of 1.6%.
PFE's pharmaceutical revenues exceeded our expectations.
stated that wholesaler stocking had no material impact on anyproduct.
Lipitor produced revenues of $1.9 billion/+31%.
revenues fell below our expectations by 2% ($40 million), we areencouraged by the strong growth.
Norvasc also missed our expectations, but only by $15 million.
Norvasc recorded revenues of $962 million/+4%.
Zithromax sales totaled $560 million/+7%.
grew a very strong 31% to $109 million.
International revenues growth of 18% drove Zoloft growth to $646million/+10%.
Neurontin had a particularly strong quarter, bringing in revenuesof $498 million/+34%.
Geodon continues to plug along, producing revenues of $39million.
Once PFE satisfies the FDA that Geodon does not pose significant issues regarding a cardiovascular side effect,particularly with drug interactions, Geodon should expanddramatically.
Zyrtec exceeded our expectations by over $40 million, increasingby an impressive 60%.
The introduction of Zyrtec-D in September 2001 clearly had a positive impact on this franchise.
growth clearly exceeds prescription growth, which indicates thatrevenue growth will not continue at this pace.
strong performance of this franchise bodes well for 2002performance.
With revenues of $415 million/+9%, Viagra exceeded ourestimates.
The fact that Alliance Revenues (Aricept and Celebrex) fell shortof expectations by only $20 million seems to indicate thatCelebrex continues to perform well.
The animal health and consumer products divisions also exceededrevenue expectations.
During its conference call, PFE's Chairman and Chief Executive Officer made comments regarding synergiesbetween these divisions and PFE's core pharmaceutical business.
However, we would still not be surprised to see PFE spin-off someof these businesses, with the confectionary business as the mostlikely candidate.
Earnings-per-share clearly benefited from PFE's share repurchaseprogram, as exhibited by the fact that net income increased 21%while earnings-per-share increased 26%.
With regard to its pipeline, PFE reported several newdevelopments.
•= An intravenous form of Zithromax received approval late in PFE plans to launch this product in February 2002.
Approvals in European Union markets should also occur in2002.
•= PFE filed data regarding the cardiovascular safety of intramuscular Geodon in December 2001.
•= At its December 28, 2001 analyst meeting, PFE provided a presentation, projects that should record substantialmilestones during 2002 include: Launch of Bextra (valdecoxib) in April 2002 Launch of Spiriva during the middle of 2002 in the EuropeanUnion and late 2002 in the United States Approval of intramuscular Geodon in 2002.
Launch of Relpax in several European markets in 2002 andfiling of a cardiovascular physiology study of Relpax in2002 Approval of Vfend during the first quarter of 2002 Access to data regarding the effect of Exubera on pulmonaryfunction during the middle of 2002 In addition, PFE continues to support a strong outlook for thefuture, including: Double-digit revenue growth for 2002-2004 15% or better earnings-per-share growth for 2003-2004 We expect PFE to deliver on its top-line growth expectationsthrough 2004.
Revenue growth of 12% during the quarter suggests that PFE has the ability to execute on these objectives.
We currently estimate 2002 earnings-per-share at $1.60/+22%, thetop of the range for PFE's guidance.
earnings-per-share guidance as conservative.
can surpass 15% annual growth during this period.
be surprised to see earnings-per-share grow 20% during one ofthese years, at least.
Overall, PFE had a strong fourth quarter and 2001.
period when many large capitalization pharmaceutical companiesfaltered, PFE continued its steady leadership in thepharmaceutical industry.
During 2002, PFE should produce earnings- PFE's strong pipeline to spur top-tier earnings growth.
these reasons, we continue to rate PFE STRONG BUY/CONSERVATIVE.
A.G. Edwards
Trusted Advice • Exceptional Service s.t The material contained herein has been prepared from sources and data we believe to be reliable but we make no guarantee as to its accuracy or completeness. This material is published solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or investment product. This material is not to be construed as providing investment services in any jurisdiction where such offers or solicitation would be illegal. Opinions and estimates are as of a certain date and subject to change without notice. You should be aware that investments can fluctuate in price, value and/or income, and you may get back less than you invested. Past performance is not necessarily a guide to future performance. Investments or investment services mentioned may not be suitable for you and if you have any doubts you should seek advice from your financial consultant. Where the purchase or sale of an investment requires a change from one currency to another, fluctuations in the exchange rate may have an adverse effect on the value, price or income of the investment. Certain investments may be mentioned that are not readily realizable. This means that it may be difficult to sell or realize the investment or obtain reliable information regarding its value. The levels and basis of taxation can change. This document has been approved by A.G. Edwards & Sons (U.K.) Limited, regulated by the FSA.  2002 A.G. Edwards & Sons, Inc., Member SIPC. www.agedwards.com

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