Why Is Bristol-Myers (BMY) Up 2.6% Since Last Earnings Report?

It has been about a month since the last earnings report for Bristol-Myers Squibb (BMY). Shares have added about 2.6% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.

Bristol-Myers Q1 Earnings Beat, Sales Up on Strong Eliquis

Bristol-Myers reported better-than-expected results for the first quarter of 2019 on the stellar performance of its blood thinner drug, Eliquis.

First-quarter 2019 earnings of $1.10 per share beat the Zacks Consensus Estimate by a penny and surpassed the year-ago quarter’s earnings of 94 cents.

Total revenues of $5.92 billion surpassed the Zacks Consensus Estimate of $5.80 billion and increased 14% from $5.2 billion recorded in the year-ago period. Continued strong sales of Opdivo and Eliquis contributed to the top line in the reported quarter.

Quarterly Details

Revenues were up 18% year over year, when adjusted for foreign exchange impact. Revenues increased 24% to $3.4 billion in the United States and 2% outside the country. Ex-U.S. revenues were up 10%, when adjusted for foreign exchange impact.

Eliquis witnessed strong growth and became the top revenue generator for the company. Sales of the drug rose 28% to $1.92 billion. Opdivo, which is approved for multiple cancer indications, continued its impressive performance, with sales up 19% year over year to $1.8 billion. Sales of Opdivo and Eliquis rose 20% and 36%, respectively, in the United States.

Leukemia drug Sprycel raked in sales of $459 million, up 5% year over year. Sales of rheumatoid arthritis drug, Orencia, were up 8% to $640 million. Melanoma drug, Yervoy, contributed $384 million to the top line during the reported quarter, up 54% year over year.

Multiple myeloma drug Empliciti recorded sales of $83 million, up 51% year over year.

However, performance of key drugs in the Virology unit disappointed. Sales of Baraclude declined 37% to $141 million. Sales of other brands (including Sustiva, Reyataz, Daklinza and all other products that have lost exclusivity in major markets) fell 21% year over year to $487 million.

Adjusted research and development (R&D) expenses in the quarter were up 11.1% to $1.30 billion. Adjusted marketing, selling and administrative expenses increased 2.6% to $1 billion. Gross margin was 69% in the quarter compared with 72.8% in the year-ago quarter. The year-ago period results included an inventory charge.

Regulatory Update

In February 2019, the European Commission approved Sprycel in combination with chemotherapy for the treatment of pediatric patients with newly diagnosed Philadelphia chromosome-positive acute lymphoblastic leukemia.

Acquisitions

Earlier in the month, more than 75% of shareholders voted in favor of the company’s impending acquisition of biotech big wig Celgene Corporation (NASDAQ:CELG) at the Special Meeting of Stockholders. The transaction will close in the third quarter of 2019. The acquisition was announced in January for a whopping $74 billion.

The buyout is expected to be 40% accretive to the bottom line on a standalone basis in the first full year and result in cost synergies of approximately $2.5 billion by 2022. The merged entity will generate more than $45 billion in cash flow over the first three full years.

Pipeline Update

The phase II CheckMate -714 trial evaluating Opdivo versus Opdivo plus Yervoy in patients with recurrent or metastatic squamous cell carcinoma of the head and neck did not meet its primary endpoints.

2019 Guidance

Bristol-Myers reiterated its adjusted earnings and revenue expectations for 2019. The company projects earnings of $4.10-$4.20 per share. The Zacks Consensus Estimate for earnings is pegged at $4.16. The company expects worldwide revenues to increase mid-single digits.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Bristol-Myers has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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 this revision indicates a downward shift. Notably, Bristol-Myers has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.