Mylan (MYL) Q2 Earnings: Is a Disappointment in the Cards?

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Mylan N.V.MYL is scheduled to report second-quarter 2018 results on Aug 8, before the market opens.

The company's performance has been dismal so far, having missed earnings estimates in three of the last four quarters. The company reported an average negative earnings surprise of 4.56% over the said time frame.

Mylan N.V. Price, Consensus and EPS Surprise

Mylan N.V. Price, Consensus and EPS Surprise | Mylan N.V. Quote

In the last reported quarter, the company missed earnings estimates by 3.03%. Let's see how things are shaping up for this announcement.

Mylan's stock has lost 13.7% in the year so far compared with the industry's growth of 2.2%.

Factors to Consider This Quarter

Mylan expects revenues of $11.75-$13.25 billion in 2018 and adjusted EPS of around $5.20-$5.60.

Mylan has one of the largest product portfolios among all generic pharmaceutical companies. The company posts results in three segments on a geographic basis, namely North America, Europe and Rest of World. Although volatility in the U.S. market is expected to persist in 2018, approvals of new drugs should position Mylan better in the year ahead and help combat the decline in EpiPen sales.

The company got a major boost with the FDA's approval of a generic version of Teva Pharmaceuticals' TEVA Copaxone 40 mg. Being one of the first filers, it will also enjoy 180 days of exclusivity. Mylan and partner Biocon recently announced that the FDA has approved Fulphila, a biosimilar of Neulasta. The news comes as a significant boost for Mylan, given the potential market for Fulphilia.

The company also received the FDA approval for Ogiviri, a biosimilar version of Herceptin. The company has also launched a generic version of Novartis' Exelon patch, for the treatment of dementia associated with mild, moderate and severe Alzheimer's disease and the treatment of mild to moderate dementia associated with Parkinson's disease in the United States.

Sales in Europe are expected to be strong on product introductions. Sales in Rest of World segment should also be driven by new products and increased volume from the anti-retroviral franchise.

However, the FDA decided not approve its Abbreviated New Drug Application for the generic version of GlaxoSmithKline's GSK asthma drug, Advair Diskus, yet again. The agency found minor deficiencies in the application. Last year, the FDA had issued a complete response letter (CRL) for it, as well. The CRL also puts a question mark on Mylan's 2018 guidance and the company is expected to update on the same.

EpiPen was also facing intermittent supply constraints.

During the earnings call, we expect investors to focus on the performance of EpiPen, newly launched biosimilars and other updates from its deep pipeline.

Earnings Whispers

Our proven model doesn't show that Mylan is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat on earnings. That is not the case here as you will see below.

Earnings ESP : The Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -1.63%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank : Mylan currently carries a Zacks Rank #3. While the rank is favorable, the company's negative ESP makes surprise prediction difficult.

Note that we caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions. They are best avoided.

Stock to Consider

Here is a pharma company that you may want to consider, as our model shows that it has the right combination of elements to deliver an earnings beat this quarter.

BioDelivery Sciences BDSI has an Earnings ESP of +3.23% and a Zacks Rank of 2. The company is expected to release second-quarter results on Aug 9. You can see the complete list of today's Zacks #1 Rank stocks here .

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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 Nasdaq, Inc.

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

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