Categories Analysis, Health Care

Earnings preview: Celgene deal in focus as Bristol-Myers prepares for Q2 results

Bristol-Myers Squibb (NYSE: BMY) will be releasing its quarterly results amid growing skepticism over the planned acquisition of rival drugmaker Celgene (CELG), which is believed to be not in the best interests of the stakeholders. Analysts expect earnings of $1.06 per share for the second quarter on revenues of $6.11 billion, up 5% and 7% year-over-year respectively. The results will be published Thursday before the opening bell.

Despite the downward earnings revisions in recent weeks and muted sentiment, the strong earnings forecast points to yet another beat this time. In the to-be-reported quarter, revenue growth will likely be driven by the company’s cancer drug Opdivo, continuing the recent trend.

Bristol-Myers Squibb (BMY) tops Q1 estimates, gets shareholder approval for Celgene deal

The other contributors are anticoagulant Eliquis and oncology drug Sprycel, which continue to expand their market share. Sprycel obtained FDA approval for the treatment of Philadelphia chromosome-positive acute lymphoblastic leukemia in pediatric patients earlier this year, which was followed by a green signal from the European Union for similar indication.

It is estimated that the other key products, such as Orencia and Yervoy, also put up a good show in the second quarter in terms of sales.

The growth drivers include anticoagulant Eliquis and oncology drug, Sprycel which continue to expand their market share

The merger deal with Celgene run into trouble recently after the Federal Trade Commission expressed antitrust concerns. Also, the company’s decision to let go off the hugely successful psoriasis drug Otezla, to clear the regulatory hurdles, has raised concerns among investors.

Also see: Bristol-Myers to sell psoriasis drug to save Celgene merger

Concerns surrounding the controversial deal continue to put pressure on the stock, which is unlikely to improve much in the post-earnings session. The fact that Celgene’s blockbuster myeloma drug Revlimid will face generic competition in the next couple of years casts doubts on the prospective synergies from the combination. Meanwhile, Opdivo is facing stiff competition from its generic version developed by Merck & Company (MRCK).

Related: Bristol-Myers Q4 2018 Earnings Conference Call Transcript

Bristol-Myers’ first-quarter earnings and revenues grew in double digits, helped by a strong increase in US sales. Adjusted earnings climbed 17% annually to $1.10 per share as revenues jumped 14% to $5.9 billion.

After climbing to a record high in March, the company’s stock lost momentum in the recent weeks. It dropped about 24% in the past twelve months and 18% since the beginning of 2019.

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