Drugmakers offer weak '08 outlook

Bristol, Wyeth give disappointing full-year earnings guidance; quarterly results mixed.

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By Aaron Smith, CNNMoney.com staff writer

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NEW YORK (CNNMoney.com) -- Drugmakers Bristol-Myers Squibb and Wyeth on Thursday issued weak profit outlooks for 2008, even as both posted a surge in sales in the latest quarter.

Bristol revised its full-year earnings outlook to a range of between $1.36 and $1.46 a share, down from an earlier range of between $1.44 to $1.54 a share, primarily to reflect the impact of selling its medical imaging business.

Bristol, the No. 6 U.S. drugmaker in terms of annual sales, posted a loss from continuing operations of $133 million, or 7 cents per share, for the fourth quarter ended Dec. 31. Sales soared 33% to $5.4 billion.

The company posted a loss of $170 million, or 9 cents per share, in the year-ago period, when it had to pay charges related to a federal probe over the way it marketed products.

Bristol (BMY, Fortune 500) shares fell as much as 6% early on, but pared some of those losses. The stock was down about 2% in midday trading.

Excluding charges related to the acquisition of Adnexus Therapeutics, Bristol earned $654 million, or 33 cents per share. That's nearly double the adjusted earnings from the year-ago quarter, which came in at $344 million, or 18 cents per share.

Including a gain from the sales of its medical imaging business, Bristol reported 35 cents per share for the quarter, exceeding the 34 cents per share analysts surveyed by Thomson First Call had expected on that basis.

Bristol reported a 177% leap in sales for its blockbuster anti-clotting drug Plavix. Sales rose to nearly $1.4 billion in the fourth quarter, compared to $496 million in same period in 2006, when Plavix faced generic competition.

Sales of Plavix were dismal in 2006 because Apotex, a privately held Canadian company, flooded the U.S. market with low-cost generic versions of the drug.

But while Apotex's generic version was approved by the Food and Drug Administration, it did not receive legal clearance to enter the U.S. market since the Plavix patent doesn't run out until 2011. A New York judge blocked Apotex from producing the generic, helping brand-name Plavix pull out of its sales slump in 2007.

Excluding the impact of generic competition, Plavix sales increased 13% in the fourth quarter, Bristol said.

For 2007, Bristol said net sales jumped 12% to $19.3 billion, which included a 3% boost stemming from the weak U.S. dollar. The company's full-year profit surged more than 40% to $2 billion. Without charges, profit jumped to $2.7 billion.

Barbara Ryan of Deutsche Bank North America said, in an analyst note that she is maintaining her "buy" rating for Bristol stock along with her 12-month price target of $35 per share. That's an increase of about 50% from its current value.

Ryan said the improvement in Bristol's earnings, its strong payback to shareholders with a dividend yield of 5.6% and rising Plavix sales Plavix are among the reasons why she's bullish on the company.

Rival Wyeth (WYE, Fortune 500) also offered disappointing guidance. The nation's fifth-largest drugmaker by sales said it expects full-year earnings within a range of $3.35 to $3.49 a share. The midpoint of that range, $3.42 a share, is well below the $3.54 a share estimate analysts are expecting for 2008.

Revenue climbed about 10% to $5.76 billion in the fourth quarter, driven largely by the pediatric vaccine Prevnar. Prevnar sales surged 24% in 2007 to $2.4 billion, making it the first vaccine to exceed $2 billion in annual sales.

Wyeth said that 2007 sales jumped 10% to $22.4 billion. The company's full-year profit increased to $4.6 billion.

Correction: A previous version of this story incorrectly stated the Bristol fell short of the earnings forecast because it did not take into account the gain from the sale of the medical imaging business. To top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.