Thursday, May 7, 2020

Is Bristol-Myers Squibb Immune to the Virus Crisis?

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What’s happening: Bristol-Myers Squibb is scheduled to report its first-quarter results before the opening bell on Thursday, May 7.

What happened: COVID-19 has affected almost all economies and all companies. Even then, there are some stocks that are benefitting from the pandemic and continue to stand tall in the crisis. Bristol-Myers Squibb is one such company.

At a time when analysts are busy reducing their estimates for most companies, Bristol-Myers is a rare example of a company that has seen its estimates being revised higher. The New York-based drug maker’s record of beating earnings estimates every quarter over the past two years also raises hopes for the upcoming earnings release. However, there is still one concern that is likely to impact the company’s overall growth this quarter.

Expectations for the quarter: The pharma company is expected to report strong growth in both revenues and profits for the latest quarter.

  • The consensus revenue estimate stands at $10.02 billion, representing 69.3% growth versus the same quarter last year.
  • Analysts expect the company to report earnings of $1.49 per share, up 35.5% from the year-ago quarter.

Why it matters: Even during the coronavirus pandemic, people need to continue their medication courses. For instance, if someone has been diagnosed with cancer, they will need to continue taking immuno-oncology drugs even during the outbreak.

The pharma-company’s blood thinner drug, Eliquis, saw massive growth of 19% in the fourth quarter and generated the highest sales for the company. Bristol-Myers’ immuno-oncology drug, Opdivo, generated sales of $1.8 billion. Although this was a decline of around 2%, various label expansions are expected to support the drug’s sales in the first quarter.

Bristol-Myers added oncology drug, Revlimid, to its portfolio with the acquisition of Celgene Corporation last year. Revlimid generated sales of $1.3 billion in the fourth quarter and is expected to show similar growth trends in the first quarter.

While being mostly insulated, the pandemic has impacted Bristol-Myers in some ways. The company’s sales staff has not been able to meet physicians directly, which could affect sales of various drugs. The company has also announced temporary suspension or postponement of some clinical studies.

Ahead of its earnings, Bristol-Myers received a setback with the FDA announcing a three-month in its approval decision of the company’s CAR-T cell therapy.

How the shares have performed so far: Investors seem a bit cautious ahead of the quarterly release, with shares of Bristol-Myers down around 0.8% over the past five days and falling 0.4% in yesterday’s session. The company’s shares have plunged around 9% over the past three months but gained almost 6% in the previous month.

What to watch: Bristol-Myers is under immense pressure to report strong earnings results this quarter. Investors will be expecting the company to issue an update on any disruptions to its supply chain. Markets also expect Bristol-Myers to issue guidance for the next quarter.

The Markets Today

     

European stocks will be in focus today, after the region’s markets closed lower in the previous session.

Context: European stocks closed lower on Wednesday following disappointing economic data and a profit warning from BMW. Investors also assessed efforts to ease lockdown measures in the region.

Details: Various countries in Europe have begun easing lockdown measures. So far investors have been jittered by the impact of the coronavirus outbreak on the economy. The UK has now surpassed Italy in the number of deaths from COVID-19, making the country’s fatality numbers the highest in Europe.

Meanwhile, the Eurozone released disappointing data on Wednesday, which showed business activity contracting to fresh lows in April. The IHS Markit’s composite PMI plunged to 13.6 last month, versus a reading of 29.7 in March.

Although BMW reported a 133% increase in its operating profits for the first quarter, the company warned that the COVID-19 may significantly hurt its earnings in 2020.

London’s FTSE 100 managed to post a slight gain, rising 0.07% in yesterday’s session. The IHS Markit UK construction PMI dipped to 8.2 in April, from a reading of 39.3 in March.

The European Stoxx 600 index tumbled 0.35% on Wednesday, with oil and gas among the worst performing sectors, declining around 3.5%. Crude oil snapped its five-day winning streak and turned negative.

Shares of Dialog Semiconductor rose around 14% after the British firm reported upbeat quarterly earnings and issued a strong forecast for the year. AstraZeneca’s stock gained around 4% after the drug-maker announced FDA approval for its heart failure treatment.

The German 30 fell 1.15% on Wednesday, while the French 40 index declined 1.11% and the FTSE MIB Index closed lower by 1.31% in the previous session.

What to watch: Investors continue to monitor the daily coronavirus numbers, with the total number of cases exceeding 3,755,340 globally. The number of positive cases in Spain has surpassed 220,320 with around 25,850 deaths, while cases in Italy have exceeded 214,450 with 29,680 fatalities. The UK confirmed over 202,350 cases with 30,150 deaths.

Markets await the construction PMI report from the Eurozone and various other reports from several European nations. The IHS Markit Eurozone construction PMI fell to a reading of 33.5 in March, from 52.2 in February.

Other Markets: US indices closed mostly lower on Wednesday, with the Dow and S&P 500 down by 0.91% and 0.70%, respectively. The Nasdaq 100 bucked the trend, rising 0.51%.

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What else to watch today

     

Russia’s services PMI, inflation rate and foreign exchange reserves, China's foreign exchange reserves, France’s balance of trade, industrial production, payroll employment in the private sector, current account and construction PMI, Germany’s industrial production and construction PMI, Italy’s construction PMI and retail sales, UK’s house price index and Bank of England's interest rate decision, Brazil’s car production and new vehicle registrations, Canada’s business confidence, South Africa's SACCI business confidence index, Mexico’s consumer confidence and inflation rate as well as the US Challenger job cuts, nonfarm unit labour cost, labour productivity, initial jobless claims, natural gas stocks change and consumer credit change.