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Should Bristol Myers Stock Be in Your Portfolio Pre-Q3 Earnings?
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Biotech giant Bristol-Myers Squibb Company (BMY - Free Report) is scheduled to report third-quarter 2024 results on Oct. 31, before market open.
The Zacks Consensus Estimate for sales and earnings is pegged at $11.3 billion and $1.50 per share, respectively.
Image Source: Zacks Investment Research
Earnings estimate for 2024 has declined to 72 cents from 77 cents per share over the past 30 days. It’s worth noting that the annual earnings estimate has taken a massive hit due to acquisition-related expenses in 2024.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
BMY’s Earnings Surprise History
BMY has an excellent track record. BMY’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 13.75%. In the previously reported quarter, the company’s earnings beat estimates by 26.22%.
Image Source: Zacks Investment Research
What Our Model Predicts for BMY
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 -2.24%. The company currently carries a Zacks Rank #2. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Factors Influencing BMY’s Q3 Results
Total revenues in the third 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 as core indications mature, consistent label expansions in newer metastatic and adjuvant indications have likely maintained momentum for the drug in the third quarter. Both the Zacks Consensus Estimate and our model estimate for Opdivo sales are pegged at $2.4 billion.
The Zacks Consensus Estimate and our model estimate for Orencia sales are pegged at $897 million and $913.3 million, respectively.
The Zacks Consensus Estimate and our model estimate for Yervoy sales are pegged at $617 million and $622.1 million, respectively.
Reblozyl posted solid growth in both the United States and international markets in the last reported quarter. Sales in the United States are being driven by strong demand due to a broad label in the first-line setting in the country.
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 third quarter.
The Zacks Consensus Estimate and our model estimate for Reblozyl sales are pegged at $445 million and $471.7 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 model estimate for Opdualag sales are pegged at $245 million and $256 million, respectively.
Breyanzi sales might have benefited from growth in demand in second-line and third-line large B cell lymphoma indications and expanded manufacturing capacity. Strong demand in markets such as Germany, France and Japan has likely fueled sales.
The FDA had earlier 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 in the United States and reimbursement in approved markets outside the country. Zeposia’s sales, too, are likely to have increased, driven by accelerated demand in multiple sclerosis indications.
However, Abecma's uptake has not been up to management’s expectations. This trend is likely to have continued in the third quarter. Revenues, too, might have been adversely impacted by competition. BMY has a collaboration agreement with 2seventy bio, Inc. 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 (as in the previous quarters).
Eliquis remains the market-leading oral anticoagulant worldwide. While higher demand might have continued to benefit sales, an unfavorable gross-to-net impact (as patients begin to enter Medicare coverage gap) has likely affected the same. The Zacks Consensus Estimate and our model estimate for Eliquis’ sales are pegged at $2.9 billion and $2.8 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 third-quarter sales is pegged at $834 million and our model estimate for the same is pinned at $848 million.
Operating expenses are likely to have remained flat or increased slightly as additional costs of the recent acquisitions and investment in new product launches are being offset by cost reduction efforts undertaken by the company.
BMY’s Price Performance and Valuation
Shares of BMY have risen 1.2% year to date against the industry’s decline of 3.5%. However, the stock has underperformed the sector and the S&P 500 in this timeframe. From a price perspective, BMY is currently tilting toward the high end of the 52-week range.
Image Source: Zacks Investment Research
Going by the price/earnings ratio, BMY’s shares currently trade at 8.75x forward earnings, higher than its mean of 8.66x but lower than 18.47x for the large-cap pharma industry.
Image Source: Zacks Investment Research
Investment Thesis
The uptake of new drugs has been encouraging for BMY, giving anxious investors a ray of hope. BMY is banking on newer drugs like Opdualag, Reblozyl and Breyanzi to stabilize its revenue base. Approval of additional new drugs and label expansion of top drugs should further diversify its pipeline.
BMY recently won FDA approval for xanomeline and trospium chloride (formerly KarXT), an oral medication for the treatment of schizophrenia, in adults. The drug was approved under the brand name Cobenfy.
Cobenfy represents the first new pharmacological approach to treating schizophrenia in decades.
BMY had undertaken strategic acquisitions to augment its product portfolio and these seem to be reaping fruits now. However, there is a long way to go. On the flip side, the company has undertaken colossal debt to finance these acquisitions.
The FDA also recently approved Opdivo for the treatment of adult patients with resectable (tumors ≥4 cm or node positive) non-small cell lung cancer (NSCLC) and no known epidermal growth factor receptor (EGFR) mutations or anaplastic lymphoma kinase (ALK) rearrangements for neoadjuvant treatment (before surgery), in combination with platinum-doublet chemotherapy, followed by single-agent Opdivo as adjuvant treatment after surgery.
Stay Invested in BMY Stock
Large biotech companies are generally considered safe havens for investors interested in this sector. Irrespective of how the company fares in the third quarter, BMY makes for a good long-term investment. Management’s efforts to revive the top line in the face of generic challenges for key drugs are commendable.
For investors already owning the stock, staying invested would be a prudent move. The company’s attractive dividend yield is a strong positive for investors.
Image: Shutterstock
Should Bristol Myers Stock Be in Your Portfolio Pre-Q3 Earnings?
Biotech giant Bristol-Myers Squibb Company (BMY - Free Report) is scheduled to report third-quarter 2024 results on Oct. 31, before market open.
The Zacks Consensus Estimate for sales and earnings is pegged at $11.3 billion and $1.50 per share, respectively.
Image Source: Zacks Investment Research
Earnings estimate for 2024 has declined to 72 cents from 77 cents per share over the past 30 days. It’s worth noting that the annual earnings estimate has taken a massive hit due to acquisition-related expenses in 2024.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
BMY’s Earnings Surprise History
BMY has an excellent track record. BMY’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 13.75%. In the previously reported quarter, the company’s earnings beat estimates by 26.22%.
Image Source: Zacks Investment Research
What Our Model Predicts for BMY
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 -2.24%. The company currently carries a Zacks Rank #2. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Factors Influencing BMY’s Q3 Results
Total revenues in the third 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 as core indications mature, consistent label expansions in newer metastatic and adjuvant indications have likely maintained momentum for the drug in the third quarter. Both the Zacks Consensus Estimate and our model estimate for Opdivo sales are pegged at $2.4 billion.
The Zacks Consensus Estimate and our model estimate for Orencia sales are pegged at $897 million and $913.3 million, respectively.
The Zacks Consensus Estimate and our model estimate for Yervoy sales are pegged at $617 million and $622.1 million, respectively.
Reblozyl posted solid growth in both the United States and international markets in the last reported quarter. Sales in the United States are being driven by strong demand due to a broad label in the first-line setting in the country.
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 third quarter.
The Zacks Consensus Estimate and our model estimate for Reblozyl sales are pegged at $445 million and $471.7 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 model estimate for Opdualag sales are pegged at $245 million and $256 million, respectively.
Breyanzi sales might have benefited from growth in demand in second-line and third-line large B cell lymphoma indications and expanded manufacturing capacity. Strong demand in markets such as Germany, France and Japan has likely fueled sales.
The FDA had earlier 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 in the United States and reimbursement in approved markets outside the country. Zeposia’s sales, too, are likely to have increased, driven by accelerated demand in multiple sclerosis indications.
However, Abecma's uptake has not been up to management’s expectations. This trend is likely to have continued in the third quarter. Revenues, too, might have been adversely impacted by competition. BMY has a collaboration agreement with 2seventy bio, Inc. 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 (as in the previous quarters).
Eliquis remains the market-leading oral anticoagulant worldwide. While higher demand might have continued to benefit sales, an unfavorable gross-to-net impact (as patients begin to enter Medicare coverage gap) has likely affected the same. The Zacks Consensus Estimate and our model estimate for Eliquis’ sales are pegged at $2.9 billion and $2.8 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 third-quarter sales is pegged at $834 million and our model estimate for the same is pinned at $848 million.
Operating expenses are likely to have remained flat or increased slightly as additional costs of the recent acquisitions and investment in new product launches are being offset by cost reduction efforts undertaken by the company.
BMY’s Price Performance and Valuation
Shares of BMY have risen 1.2% year to date against the industry’s decline of 3.5%. However, the stock has underperformed the sector and the S&P 500 in this timeframe. From a price perspective, BMY is currently tilting toward the high end of the 52-week range.
Image Source: Zacks Investment Research
Going by the price/earnings ratio, BMY’s shares currently trade at 8.75x forward earnings, higher than its mean of 8.66x but lower than 18.47x for the large-cap pharma industry.
Image Source: Zacks Investment Research
Investment Thesis
The uptake of new drugs has been encouraging for BMY, giving anxious investors a ray of hope. BMY is banking on newer drugs like Opdualag, Reblozyl and Breyanzi to stabilize its revenue base. Approval of additional new drugs and label expansion of top drugs should further diversify its pipeline.
BMY recently won FDA approval for xanomeline and trospium chloride (formerly KarXT), an oral medication for the treatment of schizophrenia, in adults. The drug was approved under the brand name Cobenfy.
Cobenfy represents the first new pharmacological approach to treating schizophrenia in decades.
BMY had undertaken strategic acquisitions to augment its product portfolio and these seem to be reaping fruits now. However, there is a long way to go. On the flip side, the company has undertaken colossal debt to finance these acquisitions.
The FDA also recently approved Opdivo for the treatment of adult patients with resectable (tumors ≥4 cm or node positive) non-small cell lung cancer (NSCLC) and no known epidermal growth factor receptor (EGFR) mutations or anaplastic lymphoma kinase (ALK) rearrangements for neoadjuvant treatment (before surgery), in combination with platinum-doublet chemotherapy, followed by single-agent Opdivo as adjuvant treatment after surgery.
Stay Invested in BMY Stock
Large biotech companies are generally considered safe havens for investors interested in this sector. Irrespective of how the company fares in the third quarter, BMY makes for a good long-term investment. Management’s efforts to revive the top line in the face of generic challenges for key drugs are commendable.
For investors already owning the stock, staying invested would be a prudent move. The company’s attractive dividend yield is a strong positive for investors.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.