Why Is Bristol-Myers (BMY) Down 3.1% Since the Last Earnings Report?

A month has gone by since the last earnings report for Bristol-Myers Squibb Company BMY. Shares have lost about 3.1% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it 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 Beats on Q1 Earnings, Ups 2017 View

Bristol-Myers first-quarter 2017 earnings of $0.84 per share beat the Zacks Consensus Estimate of $0.72 and surged 14% from the year-ago period. We note that the bottom-line was boosted by an $0.18 contribution from the patent-infringement litigation settlement related to Merck’s PD-1 antibody Keytruda.

Total revenue of $4.93 billion increased 12% year over year and was also above the Zacks Consensus Estimate of $4.78 billion. Strong sales of Opdivo and Eliquis drove the top line in the reported quarter.

Quarterly Details

Revenues were up 13% year over year, when adjusted for foreign exchange impact. Revenues in the U.S. increased 8% to $2.7 billion and increased 18% outside the U.S. Ex-US revenues were up 20%, when adjusted for foreign exchange impact.

Leukemia drug Sprycel raked in sales of $463 million, up 14%. Melanoma drug Yervoy contributed $330 million to the top line during the reported quarter, up 25%.

Opdivo, which is approved for multiple cancer indications, generated revenues of $1.13 billion,up 60% from the year-ago period.

However, the performance of key drugs in the Virology unit was disappointing. Sales of Baraclude declined 3% to $282 million. The Reyataz and Sustiva franchises deteriorated 13% and 33% year over year to $193 million and $184 million, respectively.

Nevertheless, sales of Eliquis were $1.1billion during the reported quarter, up 50% y/y. Bristol-Myers has a partnership with Pfizer for Eliquis. Bristol-Myers’ HCV franchise contributed $162 million to its top line, down 62%. Orencia revenues were up 13% to $535 million.

Multiple myeloma drug, Empliciti recorded sales of $53 million, up 12.8% sequentially.

Research and development (R&D) expenses in the quarter increased 13% to $1.3 billion while marketing, selling and administrative expenses rose1% to $1.1 billion.

Gross margin was 74.5% in the quarter, compared with 76% in the year-ago quarter.

In Feb 2017, the company repurchased its common stock worth $2 billion under an accelerated share repurchase (ASR) agreements. The ASR funding was done through a combination of debt and cash as a part of the company’s existing share repurchase authorization.

2017 Earnings Guidance Raised

Bristol-Myers has raised its earnings expectations for 2017. The company now projects earnings in the range of $2.85 to $3.00 per share (old guidance: $2.70 to $2.90).

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter In the past month. The consensus estimate has shifted by 5.4% due to these changes.

Bristol-Myers Squibb Company Price and Consensus

 

Bristol-Myers Squibb Company Price and Consensus | Bristol-Myers Squibb Company Quote

VGM Scores

At this time, Bristol-Myers' stock has an average score of 'C', on both growth and momentum front.  The stock was also allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.

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

Based on our scores, the stock is equally suitable for momentum, growth and value investors.

Outlook

Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising.  Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.

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