Why Is Bristol-Myers (BMY) Down 10.1% Since Last Earnings Report?

It has been about a month since the last earnings report for Bristol-Myers Squibb (BMY). Shares have lost about 10.1% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Bristol-Myers due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Bristol-Myers' Q4 Earnings & Revenues Beat Estimates

Bristol-Myers reported better-than-expected results for the fourth quarter of 2019 on stellar performance of its blood thinner drug, Eliquis, and addition of sales from Celgene’s drugs. The numbers included Celgene’s results, following its acquisition on Nov 20.

Fourth-quarter 2019 earnings of $1.22 per share easily beat the Zacks Consensus Estimate of 88 cents and increased from the year-ago quarter’s earnings of 94 cents.

Total revenues of $7.95 billion comprehensively beat the Zacks Consensus Estimate of $6.14 billion and increased 33% from $5.97 billion in the year-ago period. Strong growth was mainly driven by addition of Celgene’s products.

Full-Year Results

Bristol-Myers’ adjusted earnings per share were $4.69 per share for the full year, up 18%. Full-year revenues rose 16% to approximately $26.1 billion.

Quarterly Details

Revenues were up 34% year over year when adjusted for foreign exchange impact. Revenues increased 42% to $4.8 billion in the United States and 21% outside the country. Ex-U.S. revenues were up 23% when adjusted for foreign exchange impact.

Eliquis witnessed strong growth and was the top revenue generator for the company yet again. Sales of the drug rose 19% to $2 billion. We note that Bristol-Myers has a collaboration agreement with Pfizer (NYSE:PFE) for Eliquis. Sales of Opdivo, which is approved for multiple cancer indications, were down 2% year over year to $1.76 billion. While sales of Eliquis rose 18%, Opdivo sales were down 10% in the United States.

Leukemia drug, Sprycel, raked in sales of $549 million, up 2% year over year. Sales of rheumatoid arthritis drug, Orencia were up 8% to $792 million. Melanoma drug, Yervoy, contributed $385 million to the top line, flat year over year.

Multiple myeloma drug, Empliciti, recorded sales of $94 million, up 36% year over year.

The performance of key drugs in the Virology unit were disappointing. Sales of Baraclude declined 26% to $122 million. Sales of other brands (including Sustiva, Reyataz, Daklinza and all other products that have lost exclusivity in major markets) fell 39% year over year to $356 million.

Myeloma drug, Revlimid, added with Celgene’s acquisition contributed $1.3 billion to the top line. Other key drugs from Celgene — Pomalyst and Abraxane — generated sales of $322 million and $166 million, respectively.

Adjusted research and development (R&D) expenses in the quarter were up 44.4% to $1.96 billion. Adjusted marketing, selling and administrative expenses increased 27.3% to $1.7 billion.

Gross margin was 68.6% in the quarter compared with 72% in the year-ago quarter.

Celgene Acquisition Update

In November, Bristol-Myers completed the previously announced acquisition of biotech bigwig Celgene Corporation (NASDAQ:CELG) for a whopping $74 billion. The acquisition added blockbuster oncology drug, Revlimid to Bristol-Myers portfolio. Bristol-Myers owns approximately 69% of the combined entity, while Celgene shareholders own approximately 31%.

In November, Celgene sold its global rights to psoriasis drug, Otezla, to Amgen (NASDAQ:AMGN) in connection with the regulatory approval process for Celgene’s acquisition by Bristol-Myers.

2020 Guidance

Bristol-Myers provided guidance for revenues and adjusted earnings in 2020. The company projects earnings of $6.00-$6.20 per share. The company expects revenues for 2020 in the range of $40.5 billion-$42.5 billion.

The company expects adjusted earnings per share in 2021 to be between $7.15 and $7.45.

How Have Estimates Been Moving Since Then?

Estimates review followed an upward path over the past two months.

VGM Scores

At this time, Bristol-Myers has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% 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

Bristol-Myers has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.