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Bristol-Myers (BMY) Q1 Earnings: Can the Stock Surprise?

Bristol-Myers Squibb Company BMY is scheduled to report first-quarter 2016 results on Apr 28. Last quarter, the company reported a positive earnings surprise of 35.71%. Will Bristol-Myers be able to beat estimates this time around as well? Let us see how things have shaped up for this quarter.

Factors Likely to Impact Q1 Results

Bristol-Myers’ high-profile immuno-oncology drug, Opdivo, should continue to contribute to top-line growth on the back of label as well as geographical expansions. Pricing and reimbursement in additional EU countries should further aid revenues. Other oncology drugs like Yervoy and Sprycel should also continue to perform well in the first quarter of 2016.

Apart from oncology drugs, anticoagulant Eliquis’ performance should continue to accelerate growth across the key markets where its uptake has been strong, while rheumatoid arthritis drug, Orencia, contributes significantly to revenues.

However, the top line could be under pressure due to the transfer of North American rights for Erbitux and the expiration of commercialization rights of Abilify in the U.S. and the EU. Moreover, the company’s HIV and HCV businesses are expected to remain under competitive pressure.

We note that Bristol-Myers divested its HIV pipeline to ViiV Healthcare (an HIV-focused company) in Feb 2016. Meanwhile, unfavorable currency movement will continue to hurt both top- and bottom-line growth.

During the first quarter, Bristol-Myers continued to actively build its partnership portfolio and pursue strategic acquisitions. In a bid to strengthen and accelerate the development of its immunoscience pipeline, last month, the company announced its intention to acquire a privately held MA-based biotech company, Padlock Therapeutics, Inc. The acquisition, which was completed early this month, gave Bristol-Myers the rights to Padlock’s protein/peptidyl arginine deiminase (PAD) inhibitor discovery program focused on autoimmune diseases.

But it’s not just immunoscience; the company plans to continue striking acquisitions/deals in other therapeutic areas such as oncology, fibrosis and genetically defined diseases.

On the first-quarter call, investor focus is expected to be on the performance of recently launched multiple myeloma drug, Empliciti, along with that of other marketed products.

Surprise History

Bristol-Myers has an impressive track record, with earnings. The company’s earnings surpassed expectations in each of the last four quarters, with average positive surprise of 35.14%.

 

Earnings Whispers

For the first quarter, our proven model does not conclusively show that Bristol-Myers is likely to beat estimates. 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. Unfortunately, that is not the case here, as elaborated below.

Zacks ESP: The Earnings ESP for Bristol-Myers is 0.00% since the Most Accurate estimate stands in line with the Zacks Consensus Estimate of 64 cents.

Zacks Rank: Bristol-Myers carries a Zacks Rank #2. Though this increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.

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

Stocks That Warrant a Look

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

The Earnings ESP for BioMarin Pharmaceutical Inc. BMRN is +22.35% and it carries a Zacks Rank #3. The company is scheduled to release first-quarter results on Apr 28.

Amgen Inc. AMGN has an Earnings ESP of +3.52% and a Zacks Rank #3. It is scheduled to report first-quarter results on Apr 28.

The Earnings ESP for Sanofi SNY is +4.17% and it carries a Zacks Rank #2. The company is scheduled to release first-quarter results on Apr 29.

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AMGEN INC (AMGN): Free Stock Analysis Report
 
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