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Mylan (MYL) to Report Q1 Earnings: Is a Beat in the Cards?

Zacks Equity Research

Mylan N.V. MYL is expected to beat on earnings when it reports first-quarter 2020 results on May 11.

The company’s performance has been excellent, beating earnings estimates in the trailing four quarters by 5.85%, on average. In the last reported quarter, the company’s earnings beat estimates by 8.53%.

Why a Likely Earnings Beat

Our proven model predicts an earnings beat for Mylan this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Mylan has an Earnings ESP of +7.18% as the Zacks Consensus Estimate stands at 88 cents and the Most Accurate Estimate at 95 cents.

Zacks Rank: The company has a Zacks Rank #3.

Factors to Consider

The company reports results in three segments on a geographic basis — North America, Europe and the Rest of the World.

North America reported 3% year-over-year growth in the last reported quarter owing to solid new product sales, a trend that most likely continued in the to-be-reported quarter. New product sales are being primarily driven by the robust performance of Wixela Inhub, the generic of Advair Diskus. The growth in demand for Fulphila (biosimilar to Neulasta) and Yupleri is likely to have boosted sales too.

Moreover, in December, Mylan launched Ogivri, a biosimilar to Roche’s Herceptin (trastuzumab), in the United States. Ogivri is approved for all indications of Herceptin, including the treatment of HER2-overexpressing breast cancer and metastatic stomach cancer (gastric or gastroesophageal junction adenocarcinoma). Incremental sales from the launch will be realized in the quarter under review.

The Zacks Consensus Estimate for this segment’s sales is $958 million.

Net sales in Europe might have benefited from new products, including Hulio, and higher volumes of existing products in the first quarter. The Zacks Consensus Estimate for this segment’s sales is $960 million.

The Rest of the World segment’s first-quarter net sales are likely to have benefited from new product sales in Australia and emerging markets, and higher volumes of existing products, primarily driven by products sold in emerging markets. The Zacks Consensus Estimate for this segment’s sales is $727 million.

Meanwhile, on the last earnings call, Mylan warned that its business might be adversely impacted by the outbreak of the coronavirus pandemic, given the global nature of the company’s supply-chain operations and businesses. Investors will be keen to know the magnitude of the impact of the same on the first quarter and the rest of the year’s performance.

Key Anticipated Updates

Investors will be focusing on pipeline updates as well. Mylan has restarted production of hydroxychloroquine sulfate tablets at its manufacturing facility in the United States to meet the increased demand resulting from the potential effectiveness of the product in treating COVID-19. Earlier, the company announced a merger agreement with Upjohn, Pfizer's PFE off-patent branded and generic established medicines business, to create a new global pharmaceutical company. In November 2019, Mylan and Pfizer announced the name of the new company to be Viatris. Last month, the European Commission approved the combination of Mylan and Upjohn, conditioned upon the completion of the sale of certain products of the former in Europe. The merger is now anticipated to close in the second half of 2020 due to the unprecedented circumstances surrounding the COVID-19 pandemic. Further updates on the same will be keenly awaited.

Share Price Performance

Mylan’s stock has lost 21.1% in the year so far compared with the industry’s decline of 6.7%.

 

Other Stocks to Consider

Here are a few other companies worth considering, as per our model these have the right mix of elements to beat on earnings this reporting cycle.

Sage Therapeutics SAGE has an Earnings ESP of +1.67% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alexion Pharmaceuticals ALXN has an Earnings ESP of +1.08% and a Zacks Rank #3.

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