Bristol-Myers Beats Handsomely on Q4 Earnings - Analyst Blog

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Bristol-Myers Squibb Company 's ( BMY ) fourth quarter 2013 earnings (excluding special items) of 51 cents per share beat the Zacks Consensus Estimate by 9 cents. Adjusted earnings in the fourth quarter of 2013 were 9% above the year-ago figure driven by higher revenues.

Including one-time items, Bristol-Myers' fourth quarter 2013 earnings came in at 44 cents per share, down 21% from the year-ago figure. We note that the biopharmaceutical major recorded a tax benefit in the year-ago quarter.

Net sales in the final quarter of 2013 increased 6% to $4.4 billion, driven by strong sales of drugs targeting the oncology market. Anti-clotting drug, Eliquis, too performed impressively in the fourth quarter of 2013. Strong sales of rheumatoid arthritis drug, Orencia, also aided results in the final quarter of 2013. Revenues edged past the Zacks Consensus Estimate of $4.3 billion. U.S. net sales in the quarter climbed 1% to $2.3 billion. Sales in international markets increased 11% to $2.2 billion.

The company's full-year earnings were $1.82 per share, down 9% due to lower revenues. Adjusted earnings in 2013 were however above the Zacks Consensus Estimate of $1.74 per share and the company's projected range of $1.70-$1.78 per share. Revenues came in at $16.4 billion, down 7% and just above the Zacks Consensus Estimate of $16.3 billion.

The Fourth Quarter in Details

Global net sales of Plavix, an anti-platelet blood thinner, indicated to reduce the risk of heart attack in patients with atherosclerosis (the build-up of plaque and hardening of the arteries), increased 65% to $81 million in the quarter. U.S. sales of the drug came in at $51 million in the final quarter of 2013 compared to $20 million recorded a year ago.  

Despite the improved sales, numbers were nowhere near Plavix's pre-genericization performance. Plavix went off-patent in the U.S. in Mar 2012 Hypertension treatment Avapro/Avalide recorded a 31% decline in sales, which came in at $58 million in the reported quarter.

Avapro/Avalide went off-patent in the U.S. in May 2012. Following the genericization of Plavix and Avapro/Avalide in major markets across the globe, Bristol-Myers and partner Sanofi ( SNY ) revamped their long-standing alliance regarding the drugs. The new agreement has taken effect from Jan 1, 2013. Eliquis posted sales of $71 million in the fourth quarter of 2013 as against $41 million recorded in the preceding quarter.

Sales of Baraclude, one of the top prescribed therapies for hepatitis B virus, came in at $412 million, up 14% year over year. Worldwide sales of HIV treatment Sustiva came in at $427 million in the fourth quarter of 2013, up 11%. Global sales of another HIV therapy, Reyataz, declined 3% to $384 million.

The key cancer drugs at Bristol-Myers performed very well in the fourth quarter of 2013. Leukemia drug, Sprycel, registered sales of $365 million, up 30%. Skin-cancer drug Yervoy, approved in the U.S. and EU in 2011, contributed $260 million to total revenue during the fourth quarter of 2013, up 23% from the year-ago period.

Sales of another oncology drug at Bristol-Myers, Erbitux, also improved during the fourth quarter of 2013. Sales climbed 5% to $180 million in the reported quarter.

Diabetes drugs -- Bydureon (up 60% to $93 million), Byetta (up 12% to $105 million) and Onglyza/Kombiglyze (up 13% to $224 million) -- performed well during the final quarter of 2013. Moreover, sales of diabetes drug Forxiga (dapagliflozin) came in at $8 million during the quarter. The U.S. Food and Drug Administration approved the drug under the trade name Farxiga earlier in the month.

Global sales of Abilify, approved for the treatment of schizophrenia and depression, decreased 22% to $635 million. The drug performed disappointingly in the U.S., with sales declining 29%. Sales of Orencia stood at $397 million, up 22%.

Adjusted gross margin as a percentage of net sales stood at 73.6% in the reported quarter as against 76.4% in the comparable quarter of 2012. Adjusted marketing, selling and administrative expenses in the reported quarter were 7% below the year-ago figure of $1.1 billion. Adjusted research and development expenses for the quarter fell 7% to $941 million.

2014 Earnings Outlook

Bristol-Myers expects adjusted earnings in 2014 in the range of $1.65-$1.80. The Zacks Consensus Estimate of $1.78 per share is towards the higher end of the guidance range.

Our Take

We are impressed by the strong sales of the newly launched drugs at Bristol-Myers during the fourth quarter of 2013. The earnings beat in the quarter was primarily due to the strong sales of oncology drugs. Lower costs also aided results. Sales of Orencia and Eliquis too were impressive in the final quarter of 2013.

Bristol-Myers has been trying to offset the declining sales of some of its important products by bringing in new products through in-licensing deals. We are also impressed by the company's efforts to develop its pipeline.

We believe that Bristol-Myers' decision to sell its global diabetes business to long-time collaborator, AstraZeneca ( AZN ), will enable it to focus extensively on its existing portfolio of oncology, neurosciences, immunology, cardiovascular and virology. The deal is expected to close shortly.

Bristol-Myers carries a Zacks Rank #3 (Hold). Actelion Ltd. ( ALIOF ) is an example of a better ranked stock in the biopharma space with a Zacks Rank #1 (Strong Buy).



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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: ALIOF , AZN , BMY , SNY

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