Pfizer's 2016 outlook falls short of estimates due to strong dollar

US drugmaker Pfizer has forecast 2016 revenue and earnings below analysts’ estimates, largely because of the strong dollar.

The company’s shares fell 1.5% to $29.70 even though soaring Prevnar pneumonia vaccine sales led to a stronger-than-expected fourth quarter.

Pfizer, which plans to buy Botox maker Allergan later this year in a $160bn deal, said it expected earnings of $2.20 to $2.30 per share in 2016.

That would not be much different from $2.20 reported for 2015 and below Wall Street forecasts of $2.36.

Evercore ISI analyst Mark Schoenebaum said that Pfizer attributed its cautious 2016 forecast largely to the stronger dollar, which hurts the value of sales outside the US.

Pfizer forecast 2016 revenue of $49bn-$51bn, up from $48.9bn in 2015 but shy of Wall Street expectations of $52.49bn.

The company’s forecasts do not include the planned purchase of Allergan in the second half of the year.

Revenue rose 7% to $14.05bn in the fourth quarter, ahead of the average analyst estimate of $13.56bn. Global vaccine revenue rose 45% to $1.92bn, with sales of Prevnar 13 doubling in the US.

Pfizer said Prevnar benefited from increased use by adults and the timing of government purchases of the product for children.

Pfizer’s net income fell to $613m from $1.23bn a year earlier.

Excluding special items, the company earned 53c per share, topping the analysts’ average estimate of 52c. Pfizer said in November that it would buy Allergan to slash its US tax bill and obtain faster-growing medicines.

The combined company would be based in Dublin and have an expected tax rate of 17%-18% by 2017, well below Pfizer’s current corporate tax rate of about 25%.

Allergan shares are trading at about a 17% discount to their value under the all-stock deal as some investors still fear the US government could stop the tax-inversion deal.