Pfizer Inc

posted higher-than-expected quarterly results and stood by its longer-term profit view, allaying investor concern over looming generic drug competition and lifting its shares 5 percent.

Pfizer's second quarter revenue in particular surpassed expectations, helped by a weak dollar that boosted the value of goods sold overseas, and strong demand for its top-selling Lipitor cholesterol drug and Lyrica nerve pain treatment.

The world's largest drugmaker also said its full-year earnings would come in at the high end of its forecast range and reaffirmed its view for earnings in 2012, the first full year that Lipitor will face generic rivals.

The issue with Pfizer is whether they can deliver the numbers and they're doing exactly that, said Deutsche Bank analyst Barbara Ryan. It was a strong quarter on both the top and bottom line.

Ryan said the company exercised strong control of expenses as it continues to integrate its $67 billion purchase of Wyeth in October, although foreign-exchange benefits were probably the biggest reason for the company's earnings beat.

Pfizer Chief Financial Officer Frank D'Amelio said the company aims to boost its dividend in stages within three years to the industry's payout range of 40 percent of annual company earnings. Pfizer's current dividend equates to 33 percent of annual earnings. The first boost should come in December.

The New York-based drugmaker earned $2.48 billion, or 31 cents per share in the quarter. That compared with $2.26 billion, or 34 cents per share, a year earlier, when it had fewer outstanding shares.

Excluding special items, Pfizer earned 62 cents per share. Analysts on average expected 52 cents, according to Thomson Reuters I/B/E/S.

Global revenue rose 58 percent to $17.33 billion, well above the analysts' average forecast of $16.65 billion. Excluding the impact of a weaker dollar, revenue would have risen 53 percent.

The company said it now expected 2010 profit to be at the upper end of its previous forecast of $2.10 to $2.20 per share, excluding special items. It said its expenses this year would be at the lower end of its earlier forecast range.

Sales of Lipitor increased 5 percent to $2.81 billion, nearly $200 million above the average estimate of analysts, according to Thomson Reuters.

Lipitor sales are expected to fall as much as 75 percent late next year when cheaper generics flood U.S. drugstores, a main reason Pfizer bought Wyeth and its array of medicines.

Sales of Lyrica, for neuropathic pain, rose 21 percent to $762 million, roughly $60 million above estimates.

DEEP DISCOUNT

Pfizer shares trade at a deep discount to rivals, largely due to its failure to develop many big-selling products over the past decade. The stock is valued at about seven times Pfizer's expected per-share 2011 earnings, compared with an average price-to-earnings ratio of 9.9 for rival large U.S. and European drugmakers.

They're not getting any credit for their pipeline, Ryan said. But she said many investors are sticking with the company due to its strong cash flow and hopes that its pipeline will eventually pay off.

In the meantime, Pfizer on Tuesday reaffirmed its view for 2012 earnings of $2.25 to $2.35 per share. It suggests the Wyeth merger will prevent a plunge in Pfizer earnings during the first full year that Lipitor faces the generic onslaught.

Pfizer's current valuation does not adequately reflect the company's stable earnings through the patent expiration and more diversified business model, J.P. Morgan analyst Chris Schott said in a research note.

Pfizer is the last of the large U.S. drugmakers to report quarterly earnings over the past two weeks, and Schott said its performance rounded out an overall modestly better than expected reporting season for the U.S. pharma group.

With the exception of Johnson & Johnson , which cut its 2010 profit view due to product recalls, industry peers beat forecasts despite costs of U.S. healthcare reform and price-control pressures on their medicines in Europe.

Pfizer shares rose 78 cents to $16.26 on the New York Stock Exchange.

(Reporting by Ransdell Pierson and Lewis Krauskopf; Editing by Michele Gershberg, Lisa Von Ahn, Dave Zimmerman)

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