Bristol-Myers Squibb Company (BMY) is set to announce its second quarter 2011 results on 28 July before the opening bell. The Zacks Consensus Estimate for the second quarter is $0.55, representing a year-over-year increase of 1.9%. Bristol Myers has surpassed earnings estimates in three of the last four quarters. The trailing four-quarter average is 5.14%.
First Quarter Recap
Bristol-Myers’s first quarter 2011 earnings (excluding special items) of $0.58 per share surpassed the Zacks Consensus Estimate by $0.05 and the year-ago earnings by $0.02. Higher revenues boosted earnings in the reported quarter.
On a reported basis (including special items), Bristol-Myers’ earnings in the quarter increased 33% to $0.57 per share. The healthcare reform negatively impacted earnings in the reported quarter by $0.03. Net sales in the reported quarter climbed 4% to $5.0 billion. (Read our detailed earnings report at: Solid Quarter at Bristol-Myers ).
Agreement of Estimate Revisions
Over the past 30 days, 6 of the 15 analysts covering Bristol-Myers have upped their earnings estimates for the second quarter of 2011. There has been no movement in the opposite direction. Earnings estimates for 2011 also have a distinct upward bias with 7 analysts increasing estimates over the past 30 days. No analyst has moved in the downward direction.
We believe that the upward bias is attributable to many positive events that have taken place at Bristol-Myers over the last few months. We note that the lead drug at Bristol-Myers is the block-buster blood-thinner Plavix, which has been co-developed with Sanofi-Aventis (SNY). Plavix is slated to go off patent in the US next year. This is likely to result in substantial revenue losses for Bristol-Myers.
Bristol-Myers is looking to combat the generic threat through partnering deals and acquisitions and introducing new products to augment its product portfolio. The latest in the series of deals inked by Bristol-Myers towards achieving this objective is the impending acquisition of privately held Amira Pharmaceuticals. Through this deal, whose purchase price is $325 million, Bristol-Myers aims to enter the market for fibrotic diseases. The market is characterized by a high unmet need.
Many key drugs of Bristol-Myers have been cleared by the regulatory authorities this year, thus bolstering its product portfolio further. Skin cancer drug, Yervoy (ipilimumab), was approved in the US and the European Union (EU) in March, 2011, and July, 2011, respectively.
In June 2011, the US Food and Drug Administration (FDA) approved Nulojix (belatacept) to prevent the rejection of transplanted kidneys in adults. In May 2011, the European Commission cleared Bristol-Myers’ blood-thinner Eliquis (apixaban) in the EU for preventing venous thromboembolic events (VTE) in adults who have undergone elective hip or knee replacement surgery. Bristol-Myers has co-developed Eliquis with Pfizer (PFE).
Magnitude of Revisions
Estimates for the second quarter 2011 have gone up by $0.01 over the last 30 days. The upward bias has resulted in the rise in 2011 earnings estimate by $0.01 to $2.21 over the past 30 days.
Our Recommendation
We have a Neutral recommendation on Bristol-Myers. The stock carries a Zacks #3 Rank (Hold rating) in the short run.
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