Raphael Stevens

PepsiCo’s earnings topped Wall Street’s estimates, but the company’s revenue missed expectations.
Demand for its snacks and drinks declined in North America.

Bottles of Pepsi soda are seen on display at a Target store on February 09, 2024 in the Flatbush neighborhood of Brooklyn borough New York City.
Michael M. Santiago | Getty Images

PepsiCo reported mixed quarterly results on Tuesday as demand for its snacks and drinks fell in North America for the fifth straight quarter.
Shares of the company dropped more than 2% in premarket trading.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

Earnings per share: $1.96 adjusted vs. $1.94 expected
Revenue: $27.78 billion vs. $27.89 billion expected

Pepsi posted fourth-quarter net income attributable to the company of $1.52 billion, or $1.11 per share, up from $1.3 billion, or 94 cents per share, a year earlier.
Excluding restructuring, impairment charges and other items, the food and beverage company earned $1.96 per share.
Net sales dropped slightly to $27.78 billion.
The company’s organic revenue, which excludes acquisitions, divestitures and foreign exchange, rose 2.1% in the fourth quarter.

Pepsi’s worldwide volume increased 1% for convenient foods and 1% for beverages. The metric strips out pricing and foreign exchange.
But demand was weaker in the company’s home market, North America. Pepsi has previously said that shoppers in the U.S. have grown more cautious, snacking less and making fewer purchases at convenience stores.
Frito-Lay North America’s volume fell 3% in the quarter. Consumers have been watching their grocery budgets, thanks to several years of higher food prices and interest rates.
“In 2024, the salty and savory snack categories underperformed broader packaged food, following multiple years in which these categories had outperformed packaged food,” CEO Ramon Laguarta and CFO Jamie Caulfield said in prepared remarks.
The company’s North American beverage unit reported a 3% decline in quarterly volume. But there were some bright spots for the division, as Gatorade gained market share and Mountain Dew Baja Blast surpassed $1 billion in annual sales.
Quaker Foods North America, still reeling from a recall from the prior December, saw its volume fall 6%. The company expects that Quaker’s performance will improve in 2025 as it laps the fallout from the recall, executives said in prepared remarks.
For 2025, Pepsi is projecting a low-single-digit increase in its organic revenue and a mid-single-digit rise in its core constant currency earnings per share.
“Looking ahead to 2025, we will continue to build upon the successful expansion of our international business, while also taking actions to improve performance in North America,” Laguarta said in a statement.

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Pfizer on Tuesday reported fourth-quarter earnings and revenue that beat estimates as sales of the company’s Covid products topped expectations and its broad cost-cutting efforts took hold.
The results cap off a critical year for Pfizer, which has been slashing costs as it recovers from the rapid decline of its Covid business and stock price over the last two years.

Albert Bourla, chairman and CEO of Pfizer, speaks at The Wall Street Journal’s Future of Everything Festival in New York City, U.S., May 22, 2024. 
Andrew Kelly | Reuters

Pfizer on Tuesday reported fourth-quarter earnings and revenue that beat estimates as sales of the company’s Covid products topped expectations and its broad cost-cutting efforts took hold.
Here’s what the company reported for the fourth quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG: 

Earnings per share: 63 cents adjusted vs. 46 cents expected
Revenue: $17.76 billion vs. $17.36 billion expected

Shares of Pfizer rose 2% in premarket trading Tuesday.
The results cap off a critical year for Pfizer, which has been pursuing broad cost cuts as it recovers from the rapid decline of its Covid business and stock price over the last two years. The company said it is on track to deliver overall net cost savings of roughly $4.5 billion by the end of 2025 from its cost-cutting program. 
The company booked fourth-quarter net income of $410 million, or 7 cents per share. That compares with a net loss of $3.37 billion, or a loss of 60 cents per share, during the same period a year ago. 
Excluding certain items, including restructuring charges and costs associated with intangible assets, the company posted earnings per share of 63 cents for the quarter.
Pfizer reported revenue of $17.76 billion for the fourth quarter, up 22% from the same period a year ago.

The company reiterated the full-year 2025 outlook it provided in December, forecasting sales of $61 billion to $64 billion, with a similar performance from its Covid products as seen in 2024. Pfizer noted that changes to the Medicare program resulting from the Inflation Reduction Act will hurt sales by $1 billion. 
Stripping out one-time items, the company expects 2025 earnings to be in the range of $2.80 to $3 a share. 
But Wall Street is likely more concerned with Pfizer’s long-term financial health and its drug pipeline. Investors are also watching to see whether Pfizer can win a slice of the booming weight loss drug market with the once-daily version of its experimental obesity pill, danuglipron. 
Pfizer appears to have dodged a proxy battle with activist investor Starboard Value, which has a roughly $1 billion stake in the pharmaceutical giant, for now. The deadline passed for nominating board members for this year.

Covid products beat estimates

Pfizer’s fourth-quarter beat was fueled in part by higher-than-expected demand for its Covid products.
Paxlovid, its antiviral pill, brought in $727 million in sales for the quarter, up from the loss of $3.1 billion in revenue recorded in the year-earlier period. But the same quarter last year included a revenue reversal tied to the planned return of around 6.5 million Paxlovid doses from the U.S. government. 
Pfizer said the growth was driven by strong demand, particularly in the U.S. during a recent Covid wave, and a one-time contract delivery of 1 million treatment courses of Paxlovid to the federal government. Analysts expected the drug to bring in $630.7 million in sales, according to StreetAccount. 
The company’s Covid shot booked $3.4 billion in revenue, down $2 billion from the same period a year ago. Pfizer said the decline was mainly driven by fewer Covid vaccinations globally and lower contracted doses of its shot. 
Analysts expected $3 billion in sales for the shot, according to StreetAccount.

Non-Covid product growth

Excluding Covid products, Pfizer said revenue for the fourth quarter rose 12% on an operational basis, fueled by approved cancer products from Seagen, which it acquired in 2023 for a whopping $43 billion.
Those drugs brought in $915 million in revenue for the quarter, compared with just $132 million in sales in the fourth quarter of 2023.
Revenue also got a boost from sales of Pfizer’s Vyndaqel drugs, which are used to treat a certain type of cardiomyopathy, a disease of the heart muscle. Those drugs booked $1.55 billion in sales, up 61% from the fourth quarter of 2023.
Analysts had expected that group of drugs to rake in $1.51 billion for the quarter, according to estimates from StreetAccount.  
Pfizer said its blood thinner Eliquis, which is co-marketed by Bristol Myers Squibb, also helped drive revenue growth during the period. The drug posted $1.83 billion in revenue for the quarter, up 14% from the year-earlier period. 
That is slightly higher than the $1.67 billion that analysts were expecting, according to StreetAccount. 
Sales of Eliquis could take a hit in 2026, however, when a new price for the drug goes into effect for certain Medicare patients following negotiations with the federal government. Those price negotiations are a key provision of President Joe Biden’s Inflation Reduction Act that the pharmaceutical industry fiercely opposes.
Pfizer’s vaccine against respiratory syncytial virus, or RSV, saw $198 million in revenue for the fourth quarter, down 62% from the year-earlier period. The shot, known as Abrysvo, entered the market during the third quarter of 2023 for seniors and expectant mothers who can pass on protection to their fetuses.
The company said the decline came after a significant decrease in U.S. vaccination rates among older adults due to current recommendations from advisors to the Centers for Disease Control and Prevention, which narrowed the market opportunity for RSV shots. The advisory panel in June voted to recommend RSV shots to adults 75 and above, but said those 60 to 74 should do so only if they are at higher risk for severe disease.
Analysts had expected the shot to generate sales of $459.5 million, according to StreetAccount estimates. More

Fox will stream Super Bowl 59 on its free, ad-supported service Tubi on Sunday.
This is the first time the Super Bowl will be featured on a platform like Tubi.
The streamer could get a boost from the big game, and the Super Bowl’s viewership may grow, too.
Fox has steered clear of investing big money in subscription-based streaming services like its peers.

Getty Images

The last time Fox Corp. aired the Super Bowl, it featured buzzy commercials about its streaming service, Tubi.
This year, the broadcaster is taking a bigger leap with the free, ad-supported streamer. It’s offering football’s biggest game on the service, too.

“This time it’s less about shocking viewers and more about being in our credibility era — being a streamer that has the chops to stream the Super Bowl,” said Nicole Parlapiano, Tubi’s chief marketing officer.
Tubi will offer the same feed of the Super Bowl as its broadcast parent, commercials and all. While Fox will still claim the bulk of the viewership, the Super Bowl on Tubi signals that the media parent is betting big on its streamer.
Tubi will host two feeds as the reigning champion Kansas City Chiefs take on the Philadelphia Eagles on Sunday: the main Fox broadcast and the Spanish-language broadcast on Fox Deportes. In addition to the pregame show, there will also be a Tubi-exclusive red carpet show prior to the game for those sports lite fans who may be more interested in the celebrity sightings, halftime show and commercials.
The Tubi app, which is available on all streaming devices and televisions as well as mobile phones, has been in the middle of a so-called Super Bowl takeover since last week. Past Super Bowl games, halftime shows and other NFL-related content are now available to stream on the service.

What is Tubi?

Pavlo Gonchar | Lightrocket | Getty Images

Legacy media companies have been fighting to make their subscription-based streaming services profitable as consumers flee the traditional TV bundle. Many have used live sports, especially the NFL, to prop up their fledgling streaming services.

Fox has taken a different streaming approach with Tubi — until now.
The media giant acquired Tubi in 2020 for roughly $440 million.
While its competitors made similar acquisitions to build on their larger streaming plans — Paramount Global bought Pluto and Comcast Corp. snapped up Xumo — Fox stuck with Tubi as its primary streaming offering and has so far avoided launching its own subscription-based streamer.
“Tubi went from virtually nothing four years ago to a meaningful number for us,” said Fox Chief Financial Officer Steve Tomsic during the company’s earnings call with investors in November.
Unlike the major streaming platforms including Netflix, Warner Bros. Discovery’s Max or Disney’s Hulu or Disney+, services such as Tubi and Pluto are free offerings solely supported by advertising. The apps offer a guide of channels reminiscent of the traditional TV guide, as well as deep libraries of movies and TV series. Tubi also has original programming, although far less than the likes of Netflix, which spends billions on it. Streamers such as Tubi and Pluto rarely feature live sports.
Tubi’s viewership and revenue have been slowly gaining ground.
In 2022, Tubi’s revenue surpassed the advertising revenue generated by Fox Entertainment for the first time. The following year, Tubi for the first time earned a mention in “The Gauge,” Nielsen’s monthly snapshot of total TV and streaming viewership, not including mobile or desktop viewing. At the time, Nielsen announced Tubi had reached 1% of total TV viewing minutes. As of December, Tubi made up 1.7% of viewing minutes, according to Nielsen.
Tubi was also a source of revenue growth for Fox when the ad market was in a slump for traditional media companies. Fox has said Tubi has benefited from big moments, too, such as the recent election cycle.
The streamer recently reached 97 million monthly active viewers, and had more than 10 billion hours of streaming in 2024, said CMO Parlapiano. Tubi’s audience, 77% of which doesn’t have cable TV, skews toward millennials, Gen Z and females, with more than 34% between the ages 18 and 34.
There’s still room for Tubi to grow, CFO Tomsic said during the UBS Global Media and Communications conference in December.
“If you look at where the asset is, it’s still a bit of an unknown to many consumers, as well as sort of the professional ad buyers and the professional ad agency,” he said at the time.

Fox’s FAST approach

A Fox Sports TV camera operator during the week 5 NFL game between the Atlanta Falcons and the Carolina Panthers at Mercedes-Benz Stadium in Atlanta on Oct. 11, 2020.
David J. Griffin | Icon Sportswire | Getty Images

While Tubi isn’t yet profitable, it hasn’t been the drain on Fox that subscription-based streaming services have been on its competitors.
Fox has focused its strategy on sports and news on traditional TV since offloading its entertainment assets to Disney in 2019. In addition to touting its highly rated programming on both fronts, executives often call out Tubi as a bright spot for the company’s growth.
“[Fox has] avoided the billions of dollars in losses that other media companies have invested building out their own streaming platforms,” said Robert Fishman, an analyst at MoffettNathanson, noting that live sports aren’t typically offered on FAST platforms, the industry jargon for free, ad-supported streaming.
Offering the Super Bowl on the streaming service gives it a chance to broaden its audience even further.
“The idea of using the biggest and most powerful sports event is of course going to bring attention to Tubi,” Fishman said.
Fox did try to broaden its streaming strategy for its sports portfolio when it teamed up with Disney and Warner Bros. Discovery to announce the Venu streaming venture. Venu was supposed to offer the full live sports portfolio of each of its owners until it was held up by a lawsuit. Disney, Warner Bros. Discovery and Fox recently announced they were abandoning their efforts to launch Venu.
“After Venu, Fox needs to help investors better understand how consumers are going to see their very high-quality sports assets in a streaming world,” Fishman said.
In recent quarters, Fox executives have highlighted that much of Tubi’s viewership comes from its on-demand programming rather than the curated channels. Fox reports its quarterly earnings on Tuesday.
While the Super Bowl may provide some momentum to Tubi, it’s likely a welcome addition for the NFL, too.
While the league has been wildly successful and media rights have ballooned, it has more recently leaned into streaming as the key to its future viewership and fandom.
Disclosure: Comcast owns CNBC parent company NBCUniversal. Comcast is a co-owner of Hulu.

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President Donald Trump’s steep tariffs on Canada, Mexico and China could worsen exist­ing drug short­ages in the U.S. and raise health-care costs for patients, some drug trade groups warn. 
They also said the import taxes could strain cash-strapped generic drugmakers and distributors.
Trump on Saturday announced he would impose a 25% tariff on nearly all goods shipped from Canada and Mexico and a 10% charge on imports from China.

Shana Novak | Stone | Getty Images

President Donald Trump’s steep tariffs on Canada, Mexico and China could worsen ex­ist­ing drug shortages in the U.S., raise health-care costs for patients and threaten cash-strapped generic drugmakers, some drug trade groups warn.
Trump on Saturday announced he would impose a 25% tariff on nearly all goods shipped from Canada and Mexico and a 10% charge on imports from China, all of which were set to take effect on Tuesday. On Monday, both Mexico and Canada said the tariffs would be paused for about a month.

Still, the proposed import taxes come as the U.S. grapples with an unprecedented shortfall of crucial medicine ranging from injectable cancer therapies to generics, or cheaper versions of brand-name medicines, which has forced hospitals and patients to ration drugs. It also comes as many Americans struggle to afford the high costs of prescription medications. 
The U.S. relies heavily on other countries for pharmaceutical products, especially for generic drugs. Those medications make up 90% of Americans’ prescriptions, so tariffs could potentially threaten many patients’ access to affordable treatments. 
China in particular is a large supplier of active pharmaceutical ingredients, or APIs, for both brand-name and generic drugs due to lower manufacturing costs in the country. APIs are the main component of a drug that causes the desired effect of the treatment. Some generic drugs are manufactured overseas entirely.  
The tariffs could “increase already problematic drug shortages” by forcing generic manufacturers out of the market due to low profit margins, according to a statement from John Murphy, CEO of the Association for Accessible Medicines, which represents generic pharmaceutical companies. 
“Generic manufacturers simply can’t absorb new costs,” Murphy said Sunday. “Our manufacturers sell at an extremely low price, sometimes at a loss, and are increasingly forced to exit markets where they are underwater.” 

He urged the Trump administration to exempt generic products from tariffs, adding that the overall value of all generic sales in the U.S. has decreased by $6.4 billion in five years despite “growth in volume” and new generic drug launches. 
The Healthcare Distribution Alliance, which represents 40 drug distributors, has also called for the Trump administration to reconsider including pharmaceutical products in tariffs. In a statement Sunday, the group said tariffs would strain the pharmaceutical supply chain and “could adversely affect American patients,” whether that is through increased medical product costs or manufacturers leaving the market. 
The group said the tariffs will put additional pressure on an industry already in financial distress, noting that distributors operate on low profit margins of just 0.3%.
The U.S. will likely see “new and worsened shortages of important medications,” and those costs will be “passed down to payers and patients, including those in the Medicare and Medicaid programs,” the Healthcare Distribution Alliance said. 
An estimate from The Budget Lab at Yale University said long-term prices of pharmaceutical products in the U.S. will be 1.1% higher after shifts in the supply chain. 
Pharmaceutical Research and Manufacturers of America, which represents pharmaceutical companies, said in a statement that it shares Trump’s goal of ensuring the U.S. maintains its “global leadership in biopharmaceutical innovation and manufacturing.”
Trade measures should focus on “addressing unfair practices abroad and safeguarding our intellectual property,” the group added.

Medical devices

The U.S. also relies on overseas manufacturing for medical devices, with many key components and finished products being sourced from countries such as China, Mexico and India.
For example, Intuitive Surgical, which manufactures robotic surgical systems, disclosed in its annual report last week that a “significant majority” of the company’s instruments and accessories are manufactured in Mexicali, Mexico. 
Tariffs on the country would “increase the costs of our products manufactured in Mexico and adversely impact our gross profit,” the company said. 

More CNBC health coverage

AdvaMed, the largest medical device association globally, urged the Trump administration to exempt medical products from the tariffs. In a statement, the group said import taxes could lead to shortages of critical medical technologies, higher prices for patients and payers, and less investment in research and development. 
The tariffs and associated costs essentially function as “an excise tax in practice,” AdvaMed said, noting that Trump provided a carve-out for much of the medical technology sector when he imposed tariffs on China during his first term. 
Tariffs could also impact hospitals, which rely on imports for everyday supplies, such as gowns, gloves and syringes, along with bigger items such as X-ray equipment. 
But the American Medical Manufacturers Association, which advocates for U.S. businesses that produce medical personal protective equipment, or PPE, supports the tariffs on China and increasing domestic production of those products. 
In a statement Monday, the group said the tariffs recognize that China has “not changed its ways and continues to engage in anti-competitive and hazardous behavior that harms U.S. PPE and medical supply manufacturers and threatens our supply chains and national security.”

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Tariffs on key building materials sourced from Canada and Mexico could make homes more expensive and freeze out buyers.
President Donald Trump put 25% tariffs on goods from the two key trading partners, but later delayed duties on Mexico by a month.
Home prices are already at record highs, and Trump’s mass deportation plans could further pressure the market by reducing the construction labor force.

The U.S. housing market was already struggling under the weight of high mortgage interest rates, a low supply of existing homes for sale and historically high home prices.
Now tariffs on building materials are adding even more pressure.

About 30% of softwood lumber consumed in the U.S. is imported, largely from Canada. Wallboard, known as gypsum, is imported from Mexico. The 25% tariff President Donald Trump levied on goods from the two key trading partners will make those products that much more expensive. The Mexico tariffs were postponed Monday for a month, but they are still on the table.
“More than 70% of the imports of two essential materials that home builders rely on — softwood lumber and gypsum — come from Canada and Mexico, respectively,” Carl Harris, chairman of the National Association of Home Builders, wrote in a release. “Tariffs on lumber and other building materials increase the cost of construction and discourage new development, and consumers end up paying for the tariffs in the form of higher home prices.”
Home prices are already up well over 40% since the start of the pandemic and were still 3.8% higher in November, compared with the previous November, according to the latest read from the S&P Corelogic Case-Shiller national home price index. That annual increase was higher than the 3.6% in October.
Duties on building materials could make the market even harder for buyers.
“We believe this could make worse the affordability crisis for first-time buyers,” wrote Jaret Seiberg, housing policy analyst for TD Cowen Washington Research Group. “On the plus side, it could increase pressure on Congress to enact policies that encourage more entry-level construction including expanded tax credit programs.”

Prospective home buyers leave a property for sale during an Open House in a neighborhood in Clarksburg, Maryland.
Roberto Schmidt | AFP | Getty Images

The NAHB is asking the Trump administration to exempt building materials from the 25% tariffs, noting his executive order on the first day of his presidency that sought to “expand housing supply.”  
While the U.S. has ramped up lumber production in recent years, 70% of the country’s sawmill and wood product imports — $8.5 billion — come from Canada. They are already subject to a 14.5% tariff, so Trump’s new policy would raise it to over 39%.
And 71% of lime and gypsum product imports are from Mexico, totaling $352 million. Other materials, such as steel and appliances, are sourced from China. Trump put an additional 10% tariff on goods from China on Saturday.
New duties on imports from China, Canada and Mexico could raise construction material costs by $3 billion to $4 billion if they all take effect, affecting builders’ ability to complete projects, according to the NAHB.
The tariffs are likely to hit smaller homebuilders with tighter margins harder, but big builders are not immune.
“Even with a smaller portion of our lumber coming from Canada, and some materials from Mexico, we will all be affected — which, in turn, can impact consumers and their ability to purchase a home in the short-term,” said Sheryl Palmer, CEO of Arizona-based homebuilder Taylor Morrison. “In a time where some consumers are still struggling to overcome higher interest rates, my sincere hope is that these will be short-lived.”
Builders are already contending with a labor shortage that is only getting worse after the Trump administration started mass deportations of undocumented immigrants. Roughly 30% of construction workers are estimated to be immigrants, and a significant share of those workers are undocumented, according to the National Immigration Forum, an immigration advocacy group.
“You can run them all out of the country, but who’s going to build houses?” said Bruce McNeilage, CEO of Nashville-based Kinloch Partners, a single-family rental home developer.
While the bulk of the effect of tariffs is on new housing construction, the existing market could also feel the effects. If the costs of other consumer goods increase, all potential buyers will have less spare cash to save for a down payment.
There was also an expectation that interest rates would fall this year, but if inflation heats up again due to the tariffs, rates could even rise. This layering of both economic realities and emotional perceptions of personal wealth could hit the all-important, upcoming spring market hard. More