Mylan (MYL) Q3 Earnings: Is A Disappointment In The Cards?

Mylan N.V. (NASDAQ:MYL) is scheduled to report third-quarter 2018 results on Nov. 5, after the market closes.

The company’s performance has been dismal so far, having missed earnings estimates in three of the last four quarters. The company reported an average negative earnings surprise of 6.12% over the said time frame.

In the last reported quarter, the company missed earnings estimates by 13%. Let’s see how things are shaping up for this announcement.

Mylan’s stock has lost 19.2% in the year so far, against the industry’s growth of 0.8%.

Factors to Consider This Quarter

Concurrent with second-quarter results, Mylan lowered its annual outlook as a result of the change in expected product launches and resizing of product opportunities in the United States. The restructuring in Morgantown also impacted guidance.

Mylan expects 2018 total revenues of $11.25-$12.25 billion, down from the previous projection of $11.75-$13.25 billion. Mylan anticipates adjusted earnings per share around $4.55-$4.90, down from the earlier estimate of $5.20-$5.60.

Moreover, Mylan is evaluating strategic alternatives as the generic business in North America continues to experience pricing and competitive pressure.

While Mylan has one of the largest product portfolios among all generic pharmaceutical companies, the company has suffered a few setbacks in recent times. Mylan recently suffered a major setback as rival Teva Pharmaceutical Industries Ltd. (NYSE:TEVA) won the FDA approval for the first generic version of the former’s EpiPen and EpiPen Jr (epinephrine) auto-injector for the emergency treatment of allergic reactions, including those that are life-threatening (anaphylaxis), in adults and pediatric patients.

The approval of a generic would negatively impact EpiPen sales of Mylan as the generic will obviously be priced lower. Mylan was earlier under the scanner for high price of the product. We note that the company already has its own authorized generic for the same.

The company earlier suffered a setback, when the FDA refused to approve its Abbreviated New Drug Application for Wixela, the generic version of GlaxoSmithKline’s (NYSE:GSK) asthma drug, Advair Diskus. The company recently stated that it has not received any new information request from the FDA for the same.

Nevertheless, the biosimilar business continues to gain traction.

Mylan and partner Biocon obtained FDA approval of Fulphila, a biosimilar of Neulasta. The news comes as a significant boost for Mylan, given the potential market for Fulphilia. The company also received the FDA approval for Ogivri, a biosimilar version of Herceptin.

The European Medicines Agency's Committee for Medicinal Products for Human Use (CHMP) issued a positive opinion recommending approval of Fulphila and Ogivri. The European Commission (EC) has granted marketing authorization to Hulio, a biosimilar of Humira for all indications.

During the earnings call, we expect investors to focus on the performance of EpiPen, newly launched biosimilars and other updates from its pipeline.

Earnings Whispers

Our proven model doesn’t show that Mylan is likely to beat 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) to be able to beat on earnings. That is not the case here as you will see below.

Earnings ESP: The Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -1.12%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Mylan currently carries a Zacks Rank #3. While the rank is favorable, the company’s negative ESP makes surprise prediction difficult.

Note that we caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions. They are best avoided.

Stock to Consider

Here is a pharma company you may want to consider, as our model shows that it has the right combination of elements to deliver an earnings beat this quarter.

Pacira Pharmaceuticals (NASDAQ:PCRX) has an Earnings ESP of +45.9% and a Zacks Rank #2. The company is scheduled to report results on Nov 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

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