Bristol-Myers Squibb Company (BMY) is all set to announce its first quarter 2011 results on April 28, 2011 before the opening bell. The Zacks Consensus Estimate for the first quarter is $ 0.53, representing a year-over-year decrease of 5.4%. Bristol Myers has surpassed earnings estimates in three of the last four quarters but fell short of the Zacks Consensus Estimate by a penny in the final quarter of 2010. The trailing four-quarter average is 4.71%.
Fourth Quarter recap
Bristol-Myers Squibb Company’s fourth quarter 2010 earnings (excluding special items worth $ 324 million) of $ 0.47 fell short of the Zacks Consensus Estimate by a penny. However, fourth quarter earnings remained flat from the year-ago period. On a reported basis (including special items), Bristol-Myers’ earnings in the quarter fell 31.7% to $ 0.28.
Net sales in the reported quarter climbed 2% to $ 5.11 billion. Revenues also surpassed the Zacks Consensus Revenue Estimate of $ 5.06 billion driven by the impressive showing of Bristol-Myers’ lead drugs including blood thinner Plavix. The healthcare reform enacted in 2010 negatively impacted net sales in the reported quarter by 1.5%. (Read our full coverage of the earnings report at BMY Misses by a Penny in Q4.)
Agreement of Estimate Revisions
Over the past thirty days, only 4 of the 17 analysts covering Bristol-Myers for the first quarter of 2011 have revised their earnings estimates. While 3 analysts have trimmed their estimates only 1 has moved in the opposite direction.
The majority of analysts have left their earnings estimates unchanged. We believe the lack of significant directional pressure on the stock highlights the efforts undertaken by the company to counter the loss of revenues that will arise once Bristol-Myers’ key drugs including Plavix, co-developed with Sanofi-Aventis (SNY), lose their market exclusivity.
Estimates for fiscal 2011 have a significant upward bias with 6 of the 20 analysts covering Bristol-Myers for fiscal 2011 increasing earnings estimates as against a solitary downward movement. We believe that the US approval of cancer candidate Yervoy (ipilimumab) in March 2011 (Please refer to BMY's Cancer Drug Cleared in the US ) has contributed to the upward bias.
Magnitude of Estimate Revisions
Estimates for the first quarter of 2011 have remained static at $ 0.53 over the last 30 days due to a lack of significant estimate revisions by the analysts following the stock. Estimates for fiscal 2011 too are static at $ 2.17 over a similar time period.
Our Take & Recommendation
We currently have a ‘Neutral’ recommendation on Bristol-Myers, which is supported by a Zacks #3 Rank (short-term ‘Hold’ rating). Our biggest concern for the company is the high exposure to generic risk on many of its leading drugs.
However, Bristol-Myers has already taken measures like the extension of the Abilify agreement with Otsuka, the acquisition of ZymoGenetics and Medarex to combat the threat of generics hanging over it.
The approval of ipilimumab comes as a big boost for the company and will bolster its top line. Bristol-Myers intends to launch four more compounds – apixaban, belatacept, brivanib and dapagliflozin – by 2012. The new launches are expected to drive growth in 2013 and beyond. We also expect Bristol-Myers to earn more revenues through partnering deals and acquisitions.
BRISTOL-MYERS (BMY): Free Stock Analysis Report
SANOFI-AVENTIS (SNY): Free Stock Analysis Report
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