Bristol-Myers Misses on All Fronts - Analyst Blog

By
A A A

Bristol-Myers Squibb Company 's ( BMY ) fourth quarter 2011 earnings (excluding special items) of $0.53 per share fell short of the Zacks Consensus Estimate by $0.02. Adjusted earnings in the final quarter of 2011 were above the year-ago earnings by $0.06. Higher than expected expenses led to the earnings miss in the reported quarter.

On a reported basis (including special items), Bristol-Myers' earnings in the quarter increased 79% to $0.50 per share. The healthcare reform negatively impacted earnings in the reported quarter by $0.04.

Quarter in Detail

Net sales in the reported quarter climbed 7% to $5.45 billion. Revenues were just shy of the Zacks Consensus Estimate of $5.48 billion mainly due to lower sales of Plavix and Avapro/Avalide. US net sales in the quarter climbed 8% to $3.6 billion. Sales in international markets increased 4% to $1.9 billion.

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), fell 3% to $1.67 billion in the quarter. Plavix has been co-developed by Bristol-Myers with Sanofi ( SNY ). US sales of the drug were down 2% to $1.56 billion.

Sales of Baraclude, one of the top prescribed therapies for hepatitis B virus, came in at $318 million, up 20%. Worldwide sales of HIV treatment Sustiva climbed 14% to $412 million in the reported quarter. Global sales of another HIV therapy, Reyataz, increased 11% to $416 million. Sales of rheumatoid arthritis ( RA ) drug, Orencia, stood at $257 million, up 27%, while leukemia drug, Sprycel, registered sales of $227 million, up 34%.

Furthermore, Onglyza/Kombiglyze, a type II diabetes treatment, contributed approximately $153 million to sales in the quarter as against $73 million in the fourth quarter of 2010.

Global sales of Abilify, approved for the treatment of schizophrenia and depression, increased 4% to $737 million. The drug performed well both in the US and international markets. Sales of cancer drug Erbitux increased 10% to $181million in the fourth quarter of 2011.

Skin-cancer drug Yervoy, approved in the US and EU in 2011, contributed $144 million to total revenues during the reported quarter, up 19% sequentially.

However, hypertension treatment Avapro/Avalide disappointed in the final quarter of 2011. Global sales of Avapro/Avalide came in at $195 million in the reported quarter, down 23%.

Adjusted gross margin as a percentage of net sales stood at 75.2% in the reported quarter as against 72.9% in the comparable quarter of 2010. Adjusted marketing, selling and administrative expenses in the reported quarter climbed 21.6% to approximately $1.21 billion.

Advertising and product promotion for the quarter climbed 5% to $285 million in the final quarter of 2011. Adjusted research and development expenses for the quarter increased 7.2% to $1 billion as Bristol-Myers continues to invest in its pipeline.

Annual Results

For the full year 2011, Bristol-Myers recorded earnings of $2.28 (excluding special items), short of the Zacks Consensus Estimate by 2 cents. However, 2011 earnings were 6% above 2010 earnings. 2011 earnings were within the guidance range of $2.25-$2.30 provided by the company while releasing the third quarter 2011 results.

2011 revenues came in at $21.24 billion, just shy of the Zacks Consensus Estimate of $21.26 billion. 2011 revenues were 9% higher than 2010 revenues.

Projection for 2012

Apart from announcing financial results,Bristol-Myers also provided guidance for 2012. The pharma major expects adjusted 2012 earnings in the range of $1.90 - $2.00 per share. The Zacks Consensus Estimate for 2012 is $1.97 per share, towards the higher end of the guidance provided by the company.

Bristol-Myers expects to end 2012 with revenues in the range of $17.2-$18.2 billion. The Zacks Consensus Estimate for 2012 is $18.37 billion, above the guidance provided by the company. The projection includes approximately $2.7 billion global sales of Plavix. Plavix is slated to go off patent in the US in May 2012. This is likely to result in substantial revenue losses for Bristol-Myers.

Our Take

Apart from the impending genericization of Plavix, we believe that investor focus will be on Bristol-Myers' $2.5 billion deal to acquire Inhibitex ( INHX ). Through this deal, announced earlier this month, Bristol-Myers is targeting the lucrative hepatitis C virus market. We believe that Bristol-Myers will continue pursuing deals and acquisitions throughout 2012 to strengthen its portfolio thereby minimizing the impact of genericization.

Apart from acquisitions and partnership deals, Bristol-Myers is looking to introduce new products to augment its product portfolio to combat the generic threat. Bristol-Myers has met with a fair amount of success toward achieving this objective and launched/gained approval for many new products in 2011.

Our Recommendation

We currently have a Neutral recommendation on Bristol-Myers. The stock carries a Zacks #4 Rank (Sell rating) in the short run, highlighting near-term pressure on the stock. Even though we are concerned about the high generic risk on many of Bristol-Myers' leading franchises, we believe that the company's diversified business model coupled with its strong financial position will help in tough situations.


 
BRISTOL-MYERS ( BMY ): Free Stock Analysis Report
 
INHIBITEX INC ( INHX ): Free Stock Analysis Report
 
SANOFI-AVENTIS ( SNY ): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research



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 , Stocks

Referenced Stocks: BMY , INHX , RA , SNY

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

80%
100%

Most Active by Volume

79,812,121
  • $12.11 ▼ 5.61%
68,370,136
  • $104.83 ▲ 1.79%
65,036,978
  • $16.60 ▲ 1.22%
64,087,181
  • $8.40 ▲ 5.93%
54,443,769
  • $33.66 ▼ 2.43%
44,944,529
  • $97.82 ▲ 1.50%
40,119,778
  • $45.02 ▲ 1.44%
34,306,166
  • $80.04 ▲ 2.13%
As of 10/23/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com