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 catalysts.
Bristol-Myers Q2 Earnings Beat, 2020 Earnings View Up
Second-quarter 2020 earnings of $1.63 per share easily beat the Zacks Consensus Estimate of $1.46 and increased from the year-ago quarter’s $1.18.
Total revenues of $10.12 billion beat the Zacks Consensus Estimate of $10.1 billion and surged 61% from $6.3 billion in the year-ago period. Strong growth was mainly driven by the addition of Celgene’s products.
Quarterly Details
On a pro-forma basis, revenues were consistent as sales were negatively impacted by approximately $600 million mainly due to COVID-19-related channel inventory work downs from the first quarter as well as lower demand resulting from reduced new patient starts and fewer patient visits to physicians during the pandemic.
Revenues increased 77% to $6.5 billion in the United States and 40% outside the country. Ex-U.S. revenues were up 43% when adjusted for foreign exchange impact.
Eliquis witnessed strong growth, rising 6% to $2.2 billion. We note that Bristol-Myers has a collaboration agreement with Pfizer for Eliquis. However, sales of Opdivo, which is approved for multiple cancer indications, declined 9% year over year to $1.65 billion.
Leukemia drug, Sprycel, raked in sales of $511 million, down 6% year over year. Sales of rheumatoid arthritis drug, Orencia, were down 4% to $750 million. Melanoma drug, Yervoy, contributed $369 million to the top line, up 1% year over year.
Multiple myeloma drug, Empliciti, recorded sales of $97 million, up 7% year over year.
The performance of key drugs in the Virology unit was disappointing. Sales of Baraclude declined 18% to $121 million. Sales of other brands (including Sustiva, Reyataz, Daklinza and all other products that have lost exclusivity in major markets) fell 31% year over year to $331 million.
Myeloma drug, Revlimid, added with Celgene’s acquisition, contributed $2.9 billion to the top line and was the top-revenue generator for Bristol-Myers. Other key drugs from Celgene — Pomalyst and Abraxane — generated sales of $745 million and $308 million, respectively.
Adjusted research and development (R&D) expenses in the quarter increased to $2.2 billion from $1.3 billion. Adjusted marketing, selling and administrative expenses grew to $1.6 billion from $1.1 billion.
Key Pipeline Updates
In June, the FDA approved Opdivo for the treatment of patients with unresectable advanced, recurrent or metastatic esophageal squamous cell carcinoma (ESCC) after prior fluoropyrimidine- and platinum-based chemotherapy.
The FDA also approved Opdivo plus Yervoy given with two cycles of platinum-doublet chemotherapy for the first-line treatment of adult patients with metastatic or recurrent non-small cell lung cancer (NSCLC) with no EGFR or ALK genomic tumor aberrations. This approval was based on results from the CheckMate -9LA study.
Moreover, the FDA approved Opdivo plus Yervoy for the first-line treatment of adult patients with metastatic NSCLC whose tumors express PD-LI>1% as determined by an FDA-approved test, with no EGFR or ALK genomic tumor aberrations. This approval was based on data from Part 1a of the Checkmate -227 study.
In May, Zeposia was approved in Europe for the treatment of adult patients with relapsing forms of multiple sclerosis.
In June, the company and partner Acceleron Pharma Inc. obtained the European Commission’s (EC) approval for Reblozyl for the treatment of transfusion-dependent anemia in adult patients with myelodysplastic syndromes (MDS) or beta thalassemia.
2020 Guidance Update
Bristol-Myers now projects 2020 earnings of $6.10-$6.25 per share (previous guidance: $6.00-$6.20). The company continues to expect revenues for 2020 in the range of $40.5-$42 billion (previous guidance: $40 – $42 billion). The Zacks Consensus Estimate for revenues and earnings is pegged at $41.8 billion and $6.18 per share, respectively.
The company expects returning to a stable business environment in the third quarter and minimal impact of the pandemic fourth quarter onward.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Bristol Myers has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% 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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