Bristol-Myers (BMY) Up 0.5% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Bristol-Myers Squibb (BMY). Shares have added about 0.5% in that time frame, underperforming the S&P 500.

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

Bristol-Myers' Q1 Earnings & Sales Beat Estimates

First-quarter 2020 earnings of $1.72 per share easily beat the Zacks Consensus Estimate of $1.48 and increased from the year-ago quarter’s $1.10.

Total revenues of $10.8 billion comprehensively beat the Zacks Consensus Estimate of $9.9 billion and surged 82% from $5.9 billion in the year-ago period. Strong growth was mainly driven by the addition of Celgene’s products, which contributed 71%.

Quarterly Details

Revenues were up 83% year over year when adjusted for foreign exchange impact. The quarter benefited by approximately $500 million due to COVID-19-related buying patterns.

Revenues increased 96% to $6.8 billion in the United States and 62% outside the country. Ex-U.S. revenues were up 65% when adjusted for foreign exchange impact.

Eliquis witnessed strong growth, rising 37% to $2.6 billion. However, sales of Opdivo, which is approved for multiple cancer indications, were down 2% year over year to $1.76 billion.

Leukemia drug, Sprycel, raked in sales of $521 million, up 14% year over year. Sales of rheumatoid arthritis drug, Orencia, grew 12% to $714 million. Melanoma drug, Yervoy, contributed $396 million to the top line, up 3% year over year.

Multiple myeloma drug, Empliciti, recorded sales of $97 million, up 17% year over year.

The performance of key drugs in the Virology unit was disappointing. Sales of Baraclude declined 13% to $122 million. Sales of other brands (including Sustiva, Reyataz, Daklinza and all other products that have lost exclusivity in major markets) fell 14% year over year to $418 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 $713 million and $300 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 $1.0 billion.

Gross margin was 69.2% in the quarter compared with 66% in the year-ago quarter.

Pipeline Update

In March 2020, the FDA approved Opdivo plus Yervoy to treat hepatocellular carcinoma (HCC) in patients who have been previously treated with Nexavar.

The FDA accepted its supplemental Biologics License Application (sBLA) for Opdivo plus Yervoy, administered concomitantly with a limited course of chemotherapy, for the first-line treatment of patients with metastatic or recurrent NSCLC with no EGFR or ALK genomic tumor aberrations (CheckMate -9LA). The agency granted this application Priority Review with a target action date of Aug 6, 2020.

In April 2020, Bristol-Myers and partner and Exelixis announced that the phase III study CheckMate -9ER, which evaluated Opdivo plus Cabometyx versus Sutent in previously untreated advanced or metastatic RCC, met its primary and secondary endpoints.

Last month, the FDA approved Zeposia (ozanimod) for the treatment of adults with relapsing forms of multiple sclerosis (RMS).  However, the agency extended the action date by three months for the BLA for lisocabtagene maraleucel (liso-cel) and the new action date is Nov 16, 2020.

2020 Guidance

Bristol-Myers continued to project earnings of $6.00-$6.20 per share. The company now expects revenues for 2020 in the range of $40-$42 billion (previous guidance: $40.5-$42.5 billion). The Zacks Consensus Estimate for revenues and earnings is pegged at $41.3 billion and $6.10 per share, respectively.

The company expects the peak impact of the current COVID-19 crisis in the second quarter of 2020, with a return to a more stable business environment in the third quarter and minimal impact fourth-quarter 2020 onward.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -6.6% due to these changes.

VGM Scores

At this time, Bristol-Myers has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, 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 #2 (Buy). We expect an above average return from the stock in the next few months.

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