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Bristol Myers (BMY) Down 2.3% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Bristol Myers Squibb (BMY). Shares have lost about 2.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Bristol Myers due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Bristol-Myers Q3 Earnings Beat, '20 EPS View Raised

Bristol-Myers reported better-than-expected results for the third quarter of 2020 as multiple myeloma drug, Revlimid, and blood thinner drug, Eliquis, drove growth for the company. The company also lifted its earnings guidance for 2020.

Third-quarter 2020 earnings of $1.63 per share easily beat the Zacks Consensus Estimate of $1.49 and increased from the year-ago quarter’s $1.17.

Total revenues of $10.54 billion beat the Zacks Consensus Estimate of $10.36 billion and increased 75% from the year-ago period owing to contributions from the Celgene acquisition, which was completed in November 2019.

Quarterly Details

On a pro-forma basis, revenues were up 6% (assuming the date of the company’s acquisition of Celgene to be Jan 1, 2019).

Revenues increased 88% to $6.5 billion in the United States and 58% outside the country. Ex-U.S. revenues were up 57% when adjusted for foreign exchange impact.

Eliquis maintains momentum for the company as sales increased 9% to $2.1 billion. We note that Bristol-Myers has a collaboration agreement with Pfizer for Eliquis. However, sales of Opdivo, approved for multiple cancer indications, declined 2% year over year to $1.8 billion.

Leukemia drug, Sprycel, raked in sales of $544 million, down 3% year over year. Sales of rheumatoid arthritis drug, Orencia, were up 8% to $826 million. Melanoma drug, Yervoy, contributed $446 million to the top line, surging 26% year over year.

Multiple myeloma drug, Empliciti, recorded sales of $96 million, up 8% year over year.

Myeloma drug, Revlimid, added with erstwhile Celgene’s acquisition, contributed $3 billion to the top line and was the top-revenue generator for Bristol-Myers as sales increased 10% on a pro-forma basis. Other key drugs from Celgene — Pomalyst and Abraxane — generated sales of $777 million and $342 million, up 17% and 8%, respectively.

New drugs like Reblozyl generated sales of $96 million, while Inrebic generated sales of $13 million.

Adjusted research and development (R&D) expenses in the quarter increased to $2.3 billion from $1.4 billion. Adjusted marketing, selling and administrative expenses grew to $1.7 billion from $1.1 billion.

2020 Guidance Update

Bristol-Myers now projects 2020 earnings of $6.25-$6.35 per share (previous guidance: $6.10-$6.25). The company expects revenues for 2020 in the range of $41.5-$42 billion (previous guidance: $40.5-$42 billion).

Key Pipeline Updates

The company recently announced positive results from the POETYK PSO-1 study evaluating deucravacitinib, a novel, oral, selective tyrosine kinase 2 (TYK2) inhibitor, for the treatment of patients with moderate-to-severe plaque psoriasis. In the study, deucravacitinib met both co-primary endpoints of the Psoriasis Area and Severity Index (PASI 75) and Physician Global Assessment (sPGA) scales versus placebo and met multiple key secondary endpoints compared to Otezla.

In October, the FDA approved Opdivo plus Yervoy for the first-line treatment of adult patients with unresectable malignant pleural mesothelioma (MPM). The company also announced that the phase III CheckMate -816 trial, evaluating Opdivo plus chemotherapy compared to chemotherapy alone as neoadjuvant treatment, met a primary endpoint of pathologic complete response (pCR) in resectable non-small cell lung cancer (NSCLC).

Last month, Bristol Myers announced that it will acquire MyoKardia, Inc. for $13.1 billion.



 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

Currently, Bristol Myers has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Bristol Myers has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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