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Mylan (MYL) to Report Q2 Earnings: What's in the Cards?

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Mylan N.V. (MYL - Free Report) is scheduled to report second-quarter 2017 results on Aug 9, before the market opens. The company’s performance has been mixed so far, having topped earnings estimates in three of the trailing four quarters and in missing once. The company has delivered an average positive surprise of 1.33% in the trailing four quarters.

Last quarter, the company delivered a positive earnings surprise of 1.09%. Let’s see how things are shaping up for this announcement.

We note that shares of Mylan have gained 1.2% year to date against the industry‘s 0.4% dip.

Factors to Consider This Quarter

Concurrent with the first-quarter earnings call, Mylan stated that it expects revenues between $12.25 and $13.75 billion in 2017. The company projects earnings in the range of $5.15–$5.55 per share for 2017.

Newly launched products are likely to perform well and aid the top line, while the acquisitions of Meda and the Renaissance Topicals Business are anticipated to continue to boost the topline in the generics segment. Pricing continues to impact results and the company projects mid-single digit price erosion globally for the year for the base business in the U.S. 

The biosimilars pipeline continues to progress well. The FDA Oncologic Drugs Advisory Committee (ODAC) recently unanimously recommended approval of Mylan's biosimilar version of Roche Holdings AG (RHHBY - Free Report) breast cancer drug Herceptin.

However, Mylan’s Specialty segment, of which EpiPen is the most significant product, continues to be weak. In Dec 2016, Mylan announced the launch of the authorized generic for EpiPen Auto-Injector at a wholesale acquisition cost of $300 per epinephrine injection USP two-pack, which is more than 50% lower than the WAC of EpiPen 2-Pak Auto-Injectors. Sales of EpiPen Auto-Injector are anticipated to continue to decline in the current quarter as a result of increased competition and the impact of the authorized generic launch. Mylan stated that EpiPen will represent less than 5% of global revenues and less than 10% of sales in North America in 2017.  Meanwhile, the company’s efforts to get Advair’s generic approved suffered a blow when the FDA issued a complete response letter to its ANDA for generic Advair Diskus.

During the earnings call, we expect investors to focus on the performance of EpiPen, newly launched drugs and progress with the biosimilars pipeline.

Mylan N.V. Price and EPS Surprise


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

Earnings Whispers

Our proven model does not conclusively show that Mylan is likely to beat earnings 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 likely post an earnings beat. That is not the case here, as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -1.70%. 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. Although 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 the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some health care stocks that you may want to consider instead, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Arena Pharmaceuticals, Inc. (ARNA - Free Report) is expected to release results on Aug 7. The company has an Earnings ESP of +5.88% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Impax Laboratories has an Earnings ESP of +7.14% and a Zacks Rank #3. The company is expected to release second-quarter results on Aug 9.

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