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Will Bristol-Myers (BMY) Disappoint This Earnings Season?

Zacks Equity Research

Bristol-Myers Squibb Company BMY is scheduled to report first-quarter 2019 results on Apr 25, before market opens.

The company’s shares have declined 8.5% in the past six months compared with the industry’s decline of 0.8%.

Bristol-Myers has delivered average positive earnings surprise of 14.3% in the trailing four quarters. In the last reported quarter, the company delivered a positive surprise of 10.6%.

Let’s see how things are shaping up for this quarter.

Factors to Consider

Bristol-Myers’ key immuno-oncology drug, Opdivo, is expected to be the primary revenue driver in the to-be-reported quarter, extending its previous performance. The drug, which is approved for multiple indications, generated sales of $1.8 billion in the fourth quarter, increasing 33% year over year, and $6.7 billion in 2018, increasing 36% from 2017. In January, Opdivo+Yervoy received approval in Europe for treating patients with intermediate- and poor-risk advanced renal cell carcinoma in first-line setting.

Oncology drug, Sprycel, is also maintaining momentum. The FDA approved a label expansion of Sprycel in January to include pediatric patients aged a year or above with newly diagnosed Philadelphia chromosome-positive (Ph+) acute lymphoblastic leukemia (ALL), in combination with chemotherapy. The European Commission also approved the drug for the same indication in February 2019. We expect the recent label expansion of the drug to boost sales in the quarter.

Cardiovascular drug, Eliquis, also showed strong performance in 2018, with sales growing 32% from 2017 and 25% in the fourth quarter. The drug is expected to continue its robust sales in the first quarter.

However, the Hepatitis C and HIV businesses continue to face competitive pressure. Sales for the franchises are expected to decline.

The Zacks Consensus Estimate for first-quarter sales and earnings is pegged at $5.80 billion and $1.05, respectively.

Key Anticipated Updates

Investors will also focus on further updates on the company’s impending acquisition of Celgene Corporation CELG. The impending acquisition will result in a specialty biopharma company with a strong oncology portfolio and diverse pipeline in the therapeutic areas of inflammatory, immunologic and cardiovascular diseases. While the company's blockbuster drug, Opdivo, is performing well on the back of label expansions, it continues to face pricing pressure and stiff competition in the immuno-oncology space. This in turn has led to limited additional market share gains. Bristol-Myers recently announced that its shareholders have given a green signal to the acquisition. More than 75% of the shareholders voted in favor of the merger agreement at the Special Meeting of Stockholders. The transaction will close in the third quarter of 2019, subject to the satisfaction of customary closing conditions and regulatory approvals. However, a few shareholders had earlier opposed the deal, expressing multiple concerns related to growth of the company following the acquisition.

Earnings Whispers

Our proven model does not conclusively show that Bristol-Myers will beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

Earnings ESP : The company’s Earnings ESP is -2.61%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank : Bristol-Myers has a Zacks Rank #4 (Sell).

We caution against the stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Bristol-Myers Squibb Company Price, Consensus and EPS Surprise

Bristol-Myers Squibb Company Price, Consensus and EPS Surprise | Bristol-Myers Squibb Company Quote

Stocks to Consider

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

Biogen BIIB is scheduled to release results on Apr 24. The company has an Earnings ESP of +0.73% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here .

GlaxoSmithKline plc GSK is scheduled to release results on May 1. The company has an Earnings ESP of +2.63% and a Zacks Rank #3.

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