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Should You Buy, Sell or Hold Bristol Myers (BMY) Before Q2 Earnings?
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Biotech giant Bristol-Myers Squibb Company (BMY - Free Report) is scheduled to report second-quarter 2024 results on Jul 26, before market open.
The Zacks Consensus Estimate for sales and earnings is pegged at $11.5 billion and $1.64 per share, respectively.
Earnings estimate has declined to 55 cents from 59 cents per share for 2024 over the past 30 days. It’s worth noting that the annual earnings estimate has taken a massive hit due to acquisition-related expenses this year.
Image Source: Zacks Investment Research
Earnings Surprise History
BMY’s earnings beat estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 4.18%. In the previously reported quarter, the company’s earnings beat estimates by 3.30%.
Image Source: Zacks Investment Research
What Our Model Predicts
Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP for BMY is -1.25%. The company currently carries a Zacks Rank #3. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Factors at Play
Total revenues in the second quarter are likely to have seen an increase on the back of growth product franchise sales. Growth portfolio primarily comprises sales from immuno-oncology drugs like Opdivo, Orencia, Yervoy, Reblozyl, Opdualag, Abecma, Zeposia, Breyanzi, Camzyos, Sotyku, Krazati and others.
While Opdivo sales are expected to witness a modest pace of growth in 2024, consistent label expansions in newer metastatic and adjuvant indications have likely maintained momentum for the drug in the second quarter. Both the Zacks Consensus Estimate and our model estimate for Opdivo’s sales are pegged at $2.3 billion.
The Zacks Consensus Estimate and our estimate for Yervoy sales are pegged at $612.7 million and $629 million, respectively.
Reblozyl posted solid growth in the last reported quarter, driven by strong demand and a broad label in the first-line setting in the United States. We note that the FDA had earlier approved Reblozyl (luspatercept-aamt) as a first-line treatment for anemia in adults with lower-risk myelodysplastic syndromes who may require transfusions. International sales growth, driven by new market launches, has likely boosted sales of this drug in the second quarter.
The Zacks Consensus Estimate and our estimate for Reblozyl sales are pegged at $391 million and $367.9 million, respectively.
Strong growth in Opdualag (first-line melanoma) sales in the United States is likely to have fueled top-line growth. The Zacks Consensus Estimate and our estimate for Opdualag sales are pegged at $221 million and $216.2 million, respectively.
Breyanzi sales have likely benefited from growth in demand in second-line and third-line large B cell lymphoma indications and expanded manufacturing capacity.
The FDA recently granted accelerated approval to Breyanzi for the treatment of adult patients with relapsed or refractory follicular lymphoma who have received two or more prior lines of systemic therapy.
Camzyos sales have likely seen growth, driven by increased demand. Zeposia’s sales, too, are likely to have increased, driven by accelerated demand in multiple sclerosis indication.
However, Abecma's first-quarter revenues were negatively impacted due to competition in the United States. This trend is likely to have continued in the second quarter. BMY has a collaboration agreement with 2seventy bio, Inc. (TSVT - Free Report) for Abecma.
In the legacy portfolio, the decline in Revlimid’s revenues from generic erosion across several countries has likely pulled down the top line.
Eliquis remains the market-leading oral anticoagulant worldwide. Sales in the United States have likely seen an increase, primarily due to strong demand, including increased market share. The Zacks Consensus Estimate and our estimate for Eliquis’ sales are pegged at $3.4 billion and $3.3 billion, respectively.
Bristol-Myers has a collaboration agreement with Pfizer (PFE - Free Report) for Eliquis. The companies collaborated in 2007. Profits and losses are shared equally on a global basis, except in certain countries where Pfizer commercializes Eliquis and pays BMY a sales-based fee.
The Zacks Consensus Estimate for Pomalyst’s second-quarter sales is pegged at $859 million and our estimate for the same is pinned at $829.7 million.
Operating expenses are likely to have increased due to additional costs of the recent acquisitions and investment in new product launches.
Price Performance and Valuation
Shares of BMY have lost 16.8% year to date compared with the industry’s decline of 3%. The stock has also grossly underperformed the sector and the S&P 500. From a price perspective, BMY is currently trading toward the low end of the 52-week range.
Image Source: Zacks Investment Research
Going by the price/sales ratio, BMY’s shares currently trade at 1.87x forward sales, lower than its mean of 2.96x and 1.98x for the industry.
Image Source: Zacks Investment Research
Newer Drugs Currently Not Enough
While a single-quarter result is not that worrisome in the long run, Bristol Myers is clearly sailing in troubled waters. The top line has been adversely impacted by a decline in Revlimid sales. Both Eliquis and Opdvio are slated to face generics later in the decade. These three drugs comprise a major chunk of the company’s revenues.
BMY is banking on newer drugs like Opdualag, Reblozyl and Breyanzi to stabilize its revenue base. However, it would be a daunting task to maintain revenue growth even if newer drugs gain traction.
Strategic acquisitions to augment its product portfolio have come with caveats. The company has undertaken colossal debt to finance these acquisitions.
Conclusion
While large biotech companies are generally considered safe havens for investors interested in this sector, we would not advise investors to buy BMY before the second-quarter earnings.
For investors already owning the stock, staying invested will be a prudent move, given the low levels at which the stock is trading. A silver lining among the dark clouds is the company’s attractive dividend yield.
Image: Shutterstock
Should You Buy, Sell or Hold Bristol Myers (BMY) Before Q2 Earnings?
Biotech giant Bristol-Myers Squibb Company (BMY - Free Report) is scheduled to report second-quarter 2024 results on Jul 26, before market open.
The Zacks Consensus Estimate for sales and earnings is pegged at $11.5 billion and $1.64 per share, respectively.
Earnings estimate has declined to 55 cents from 59 cents per share for 2024 over the past 30 days. It’s worth noting that the annual earnings estimate has taken a massive hit due to acquisition-related expenses this year.
Image Source: Zacks Investment Research
Earnings Surprise History
BMY’s earnings beat estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 4.18%. In the previously reported quarter, the company’s earnings beat estimates by 3.30%.
Image Source: Zacks Investment Research
What Our Model Predicts
Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP for BMY is -1.25%. The company currently carries a Zacks Rank #3. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Factors at Play
Total revenues in the second quarter are likely to have seen an increase on the back of growth product franchise sales. Growth portfolio primarily comprises sales from immuno-oncology drugs like Opdivo, Orencia, Yervoy, Reblozyl, Opdualag, Abecma, Zeposia, Breyanzi, Camzyos, Sotyku, Krazati and others.
While Opdivo sales are expected to witness a modest pace of growth in 2024, consistent label expansions in newer metastatic and adjuvant indications have likely maintained momentum for the drug in the second quarter. Both the Zacks Consensus Estimate and our model estimate for Opdivo’s sales are pegged at $2.3 billion.
The Zacks Consensus Estimate and our estimate for Yervoy sales are pegged at $612.7 million and $629 million, respectively.
Reblozyl posted solid growth in the last reported quarter, driven by strong demand and a broad label in the first-line setting in the United States. We note that the FDA had earlier approved Reblozyl (luspatercept-aamt) as a first-line treatment for anemia in adults with lower-risk myelodysplastic syndromes who may require transfusions. International sales growth, driven by new market launches, has likely boosted sales of this drug in the second quarter.
The Zacks Consensus Estimate and our estimate for Reblozyl sales are pegged at $391 million and $367.9 million, respectively.
Strong growth in Opdualag (first-line melanoma) sales in the United States is likely to have fueled top-line growth. The Zacks Consensus Estimate and our estimate for Opdualag sales are pegged at $221 million and $216.2 million, respectively.
Breyanzi sales have likely benefited from growth in demand in second-line and third-line large B cell lymphoma indications and expanded manufacturing capacity.
The FDA recently granted accelerated approval to Breyanzi for the treatment of adult patients with relapsed or refractory follicular lymphoma who have received two or more prior lines of systemic therapy.
Camzyos sales have likely seen growth, driven by increased demand. Zeposia’s sales, too, are likely to have increased, driven by accelerated demand in multiple sclerosis indication.
However, Abecma's first-quarter revenues were negatively impacted due to competition in the United States. This trend is likely to have continued in the second quarter. BMY has a collaboration agreement with 2seventy bio, Inc. (TSVT - Free Report) for Abecma.
In the legacy portfolio, the decline in Revlimid’s revenues from generic erosion across several countries has likely pulled down the top line.
Eliquis remains the market-leading oral anticoagulant worldwide. Sales in the United States have likely seen an increase, primarily due to strong demand, including increased market share. The Zacks Consensus Estimate and our estimate for Eliquis’ sales are pegged at $3.4 billion and $3.3 billion, respectively.
Bristol-Myers has a collaboration agreement with Pfizer (PFE - Free Report) for Eliquis. The companies collaborated in 2007. Profits and losses are shared equally on a global basis, except in certain countries where Pfizer commercializes Eliquis and pays BMY a sales-based fee.
The Zacks Consensus Estimate for Pomalyst’s second-quarter sales is pegged at $859 million and our estimate for the same is pinned at $829.7 million.
Operating expenses are likely to have increased due to additional costs of the recent acquisitions and investment in new product launches.
Price Performance and Valuation
Shares of BMY have lost 16.8% year to date compared with the industry’s decline of 3%. The stock has also grossly underperformed the sector and the S&P 500. From a price perspective, BMY is currently trading toward the low end of the 52-week range.
Image Source: Zacks Investment Research
Going by the price/sales ratio, BMY’s shares currently trade at 1.87x forward sales, lower than its mean of 2.96x and 1.98x for the industry.
Image Source: Zacks Investment Research
Newer Drugs Currently Not Enough
While a single-quarter result is not that worrisome in the long run, Bristol Myers is clearly sailing in troubled waters. The top line has been adversely impacted by a decline in Revlimid sales. Both Eliquis and Opdvio are slated to face generics later in the decade. These three drugs comprise a major chunk of the company’s revenues.
BMY is banking on newer drugs like Opdualag, Reblozyl and Breyanzi to stabilize its revenue base. However, it would be a daunting task to maintain revenue growth even if newer drugs gain traction.
Strategic acquisitions to augment its product portfolio have come with caveats. The company has undertaken colossal debt to finance these acquisitions.
Conclusion
While large biotech companies are generally considered safe havens for investors interested in this sector, we would not advise investors to buy BMY before the second-quarter earnings.
For investors already owning the stock, staying invested will be a prudent move, given the low levels at which the stock is trading. A silver lining among the dark clouds is the company’s attractive dividend yield.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.