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Is a Beat in the Cards for Bristol-Myers' (BMY) Q2 Earnings?

Zacks Equity Research

Bristol-Myers Squibb Company BMY is scheduled to report second-quarter 2020 results on Aug 6, before market open.

The company’s shares have lost 8.6% in the year so far against the industry's growth of 3.6%.

Bristol-Myers has an excellent track record. The company delivered an earnings surprise of 7.94%, on average, in the trailing four quarters. In the last reported quarter, the company delivered an earnings surprise of 16.22%.

Let’s see how things are shaping up for the upcoming announcement.

Why a Likely Positive Surprise

Our proven model predicts an earnings beat for Bristol-Myers’ this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP is +3.35% as the Zacks Consensus Estimate is pegged at $1.43, while the Most Accurate Estimate is pegged at $1.48.

Zacks Rank: It currently carries a Zacks Rank #2.

Factors Driving Growth

Bristol-Myers’ blood thinner drug, Eliquis, witnessed strong growth in the last reported quarter and was one of the top revenue generators in the previous quarter with sales of $2.6 billion, up 37% year over year. This trend has most likely continued in the to-be-reported quarter, propelled by market share increases.

Sales of Bristol-Myers’ key immuno-oncology drug, Opdivo, were down in the previous quarter. It remains to be seen how the drug fared in the quarter under review amid stiff competition from Merck’s MRK Keytruda.  The drug, which is approved for multiple indications, generated sales of $1.8 billion in the last reported quarter, down 2% year over year. Nevertheless, several label expansions in the previous quarters are likely to have driven the drug’s sales in the to-be-reported quarter. In March, Opdivo plus Yervoy was approved by the FDA to treat hepatocellular carcinoma (HCC) in patients who have been previously treated with sorafenib. In February, Opdivo was approved in Japan for the treatment of patients with unresectable advanced or recurrent esophageal cancer that has progressed following chemotherapy. Incremental sales from these expansions are likely to have boosted sales in the to-be-reported quarter.

Arthritis drug, Orencia, raked in sales of $714 million in the last reported quarter, up 12% year over year. The drug is most likely to have boosted the top line in the second quarter as well.  

In November 2019, Bristol-Myers acquired Celgene Corporation following the receipt of regulatory approvals from all government authorities, as required by the merger agreement.

The acquisition added oncology drug, Revlimid, to Bristol-Myers’ portfolio. Revlimid was the top revenue generator in the previous quarter with sales of $2.9 billion and the trend is likely to have continued in the to-be-reported quarter as well.  Pomalyst too is likely to have boosted the top line in the second quarter.

In April, the FDA approved Reblozyl for the treatment of patients with anemia failing an erythropoiesis-stimulating agent and requiring two or more red blood cell (RBC) units over 8 weeks in adults with very low- to intermediate-risk MDS-RS or with myelodysplastic/myeloproliferative neoplasm with ring sideroblasts and thrombocytosis. In March, the FDA also approved Zeposia (ozanimod) for the treatment of adults with relapsing forms of multiple sclerosis (RMS), including clinically isolated syndrome, relapsing-remitting disease and active secondary progressive disease. The top line is likely to have got a boost from the incremental contributions of these two drugs, since this is the first full quarter post the approvals.  

Apart from the top and bottom-line numbers, investors will focus on updates on the label expansion of drugs and other pipeline updates. In May 2020, the FDA approved the combination of Opdivo and Yervoy for the lucrative indication of first-line treatment of adult patients with metastatic non-small cell lung cancer (NSCLC), whose tumors express PD-L1 (≥1%) as determined by an FDA-approved test, with no EGFR or ALK genomic tumor aberrations. Investors will be awaiting updates on the outlook as the coronavirus pandemic has resulted in supply-chain disruptions and affected demand for other drugs.  

Bristol Myers Squibb Company Price, Consensus and EPS Surprise

Bristol Myers Squibb Company Price, Consensus and EPS Surprise
Bristol Myers Squibb Company Price, Consensus and EPS Surprise

Bristol Myers Squibb Company price-consensus-eps-surprise-chart | Bristol Myers Squibb Company Quote

Other Stocks to Consider

Here are some other stocks you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this quarter.

Translate Bio, Inc. TBIO has an Earnings ESP of +5.26% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Incyte INCY has an Earnings ESP of +4.62% and a Zacks Rank #3.

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Merck Co., Inc. (MRK) : Free Stock Analysis Report
 
Incyte Corporation (INCY) : Free Stock Analysis Report
 
Bristol Myers Squibb Company (BMY) : Free Stock Analysis Report
 
Translate Bio, Inc. (TBIO) : Free Stock Analysis Report
 
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