Bristol-Myers (BMY) Beats On Q2 Earnings, Lifts Outlook

Bristol-Myers Squibb Company’s (NYSE:BMY) second-quarter 2016 earnings of 69 cents per share beat the Zacks Consensus Estimate of 67 cents and increased 30% from the year-ago figure.

Total revenue of $4.87 billion was also above the Zacks Consensus Estimate of $4.63 billion. Reported revenues improved 17% year over year. Strong product sales drove the top line in the quarter.

Opdivo Continues to Deliver

Global revenues increased 18%, when adjusted for foreign exchange impact. Excluding Abilify and Erbitux, global revenues were up 24% or 26% adjusted for foreign exchange impact.

While sales in the U.S. markets surged 46% to $2.7 billion, international revenues were down 6%. International revenues declined primarily due to lower hepatitis C virus (HCV) sales in Japan and France. Adjusted for foreign exchange impact, international revenues were still down 4%.

Leukemia drug, Sprycel, registered sales of $451 million, up 11%. Melanoma drug, Yervoy, contributed $241 million to the top line during the reported quarter, down 19%.

Opdivo, approved for multiple cancer indications, generated revenues of $840 million, significantly higher than $704 million in the first quarter of 2016.

However, performance of key drugs in the Virology unit was disappointing. Sales of Baraclude declined 13% to $299 million. Both the Reyataz and Sustiva franchises tanked 18% and 15% to $247 million and $271 million, respectively.

Nevertheless, sales of Eliquis were $777 million during the reported quarter, up 5.9% sequentially. Bristol-Myers has a partnership with Pfizer Inc. (NYSE:PFE) for Eliquis. The HCV franchise at Bristol-Myers contributed $546 million to the company’s top line in the quarter, up 14%. Orencia revenues were up 29% to 593 million.

Adjusted research and development (R&D) expenses in the quarter increased 13.1% to $1.1 billion while marketing, selling and administrative expenses rose 9.4% to $1.2 billion.

2016 Earnings Outlook Upped Again

Bristol-Myers has raised its earnings outlook for 2016 yet again. The company now expects earnings in the range of $2.55 to $2.65 per share (old guidance: $2.50 to $2.60). The Zacks Consensus Estimate stands at $2.63 per share.

R&D expenses are now expected to increase in the mid-teen range. Previously, the company had anticipated R&D expenses to increase in the low double-digit range.

Our Take

Bristol-Myers delivered another strong quarter with both the top and bottom lines beating estimates. Robust sales of drugs like Opdivo, Orencia, Eliquis and Sprycel in the reported quarter drove top-line growth. The company raised its earnings guidance once again for 2016, which is encouraging. Meanwhile, we are positive on Bristol-Myers’ efforts to develop its pipeline.

We expect investor focus to remain on updates regarding the company’s high-profile immuno-oncology drug Opdivo, going forward.

Bristol-Myers carries a Zacks Rank #2 (Buy). A couple of other favorably ranked stocks in the health care sector are Innoviva, Inc. (NASDAQ:INVA) and ANI Pharmaceuticals, Inc. (NASDAQ:ANIP) , each sporting a Zacks Rank #1 (Strong Buy).