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Mylan (MYL) Q2 Earnings: Will the Stock Disappoint?
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Mylan N.V. is scheduled to report second-quarter 2016 results on Aug 9, after market close. Mylan’s performance has been impressive with the company beating earnings estimates in three of the last four quarters. Overall, the company has delivered an average positive surprise of 1.79%.
In the last reported quarter, the company recorded a positive earnings surprise of 1.33%. Let’s see how things are shaping up for the second quarter of 2016.
Factors Influencing This Quarter
Mylan’s Generics segment has been performing well over the last few quarters and should continue its encouraging performance this quarter as well. Moreover, the company has seen quite a few generic launches over the past few quarters. This quarter was no exception.
Newly launched products should perform well and aid revenues while acquisitions should contribute meaningfully, thereby driving segmental growth. The company continues to expect generic pricing erosion in the low-to-mid, single-digit range in 2016.
Mylan’s Specialty segment benefited in the first quarter from higher volumes of EpiPen and higher sales of Perforomist. The company expects to see continued volume growth in EpiPen throughout the year.
Meanwhile, Mylan has been undertaking prudent acquisitions and inking strategic deals to drive long-term growth. During the quarter (Jun 2016), Mylan acquired the non-sterile, topicals-focused specialty and generics business of privately held Renaissance Acquisition Holdings in a deal worth about $1 billion. The Renaissance deal has given Mylan the right to a complementary portfolio of approximately 25 branded and generic topical products, an active pipeline of approximately 25 products, and an established U.S. sales and marketing infrastructure targeting dermatologists.
Mylan also gained an integrated manufacturing and development platform and a leading topicals-focused contract development and manufacturing organization. The transaction is expected to be immediately accretive to earnings.
Mylan has also received all regulatory clearances required to acquire the Swedish drug maker, Meda, which is a leading international specialty pharmaceutical company. Update on the transaction is expected shortly.
On the second-quarter call, investor focus will be on the company’s performance along with updates from the Meda deal.
Earnings Whispers
Our proven model does not conclusively show that Mylan is likely to beat earnings this quarter. That 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 likely post an earnings beat. That is not the case here, as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -1.74%.
Zacks Rank: Mylan’s Zacks Rank #3 increases the predictive power of the ESP but when combined with a negative ESP makes a surprise prediction difficult.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Here are some health care stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter. These stocks carry a Zacks Rank #2 and are scheduled to report second-quarter results on Aug 9.
The Earnings ESP for Impax Laboratories Inc. is +3.03%.
The Earnings ESP for Ionis Pharmaceuticals, Inc. (IONS - Free Report) is +38.00%.
Incyte Corp. (INCY - Free Report) has an Earnings ESP of +300.00%.
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Mylan (MYL) Q2 Earnings: Will the Stock Disappoint?
Mylan N.V. is scheduled to report second-quarter 2016 results on Aug 9, after market close. Mylan’s performance has been impressive with the company beating earnings estimates in three of the last four quarters. Overall, the company has delivered an average positive surprise of 1.79%.
In the last reported quarter, the company recorded a positive earnings surprise of 1.33%. Let’s see how things are shaping up for the second quarter of 2016.
Factors Influencing This Quarter
Mylan’s Generics segment has been performing well over the last few quarters and should continue its encouraging performance this quarter as well. Moreover, the company has seen quite a few generic launches over the past few quarters. This quarter was no exception.
Newly launched products should perform well and aid revenues while acquisitions should contribute meaningfully, thereby driving segmental growth. The company continues to expect generic pricing erosion in the low-to-mid, single-digit range in 2016.
Mylan’s Specialty segment benefited in the first quarter from higher volumes of EpiPen and higher sales of Perforomist. The company expects to see continued volume growth in EpiPen throughout the year.
Meanwhile, Mylan has been undertaking prudent acquisitions and inking strategic deals to drive long-term growth. During the quarter (Jun 2016), Mylan acquired the non-sterile, topicals-focused specialty and generics business of privately held Renaissance Acquisition Holdings in a deal worth about $1 billion. The Renaissance deal has given Mylan the right to a complementary portfolio of approximately 25 branded and generic topical products, an active pipeline of approximately 25 products, and an established U.S. sales and marketing infrastructure targeting dermatologists.
Mylan also gained an integrated manufacturing and development platform and a leading topicals-focused contract development and manufacturing organization. The transaction is expected to be immediately accretive to earnings.
Mylan has also received all regulatory clearances required to acquire the Swedish drug maker, Meda, which is a leading international specialty pharmaceutical company. Update on the transaction is expected shortly.
On the second-quarter call, investor focus will be on the company’s performance along with updates from the Meda deal.
Earnings Whispers
Our proven model does not conclusively show that Mylan is likely to beat earnings this quarter. That 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 likely post an earnings beat. That is not the case here, as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -1.74%.
Zacks Rank: Mylan’s Zacks Rank #3 increases the predictive power of the ESP but when combined with a negative ESP makes a surprise prediction difficult.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
MYLAN NV Price and EPS Surprise
MYLAN NV Price and EPS Surprise | MYLAN NV Quote
Stocks That Warrant a Look
Here are some health care stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter. These stocks carry a Zacks Rank #2 and are scheduled to report second-quarter results on Aug 9.
The Earnings ESP for Impax Laboratories Inc. is +3.03%.
The Earnings ESP for Ionis Pharmaceuticals, Inc. (IONS - Free Report) is +38.00%.
Incyte Corp. (INCY - Free Report) has an Earnings ESP of +300.00%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>