Bristol-Myers Squibb sunk S&P 500 this earnings season: FactSet

More than 90% of the companies in the S&P 500 (^GSPC) have reported their earnings for the first quarter of 2024, which yielded a mostly strong result for the index. However, Bristol-Myers Squibb (BMY) posted its quarterly earnings, resulting in a massive drag on the S&P. According to data from FactSet, the gains for the S&P were cut from 8.3% to 5.4% when Squibb's earnings were included.

Yahoo Finance Reporter Josh Schafer joins The Morning Brief to analyze Bristol-Myers Squibb's earnings in relation to the S&P and its impacts on the overall market.

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Nicholas Jacobino

Video transcript

All right.

Now that 92% of companies in the S and P 500 have reported earnings.

Let's talk about the performance of the index overall.

It's on pace for its highest year over year earnings growth since the second quarter of 2022.

But it would be even higher if it was not for one company.

And Josh Schafer is here to tell us, well, the banner told us, but you'll tell us more.

Bristol Myers Squibb, right.

Of course, the earnings call that we all followed very closely over the last couple of weeks that we really, our eyes on is what dragged down the index.

Um I think you guys were probably with me and being a little bit surprised in seeing this stat overall.

So Brister Miles squib is in the health care sector and really the big thing that stuck, stuck out for them here was they had a one time loss that they reported.

They don't think this is gonna be a continuing issue that had to do an acquisition, but they reported earnings per share, an earns per share loss of $4.40 that was compared to uh $2 earnings per share in the positive going back a year ago.

So a massive loss then when you take that and sort of extrapolate it to the S and P 500 growth, their big loss leads you to a massive decline in S and P 500 earnings growth.

So you go from what would have been 8.3% earnings growth for the S and P 500 down to 5.4 just by taking out Bristol Myers Squibb.

Now, if you also took out a couple more companies in the health care sector, you would actually have even further earnings grow.

So if you took out the lead sciences and you took out Pfizer, you would actually have 9.7% growth for the S and P 500.

So really the health care sectors, 25% negative earnings growth kind of weighing on when I saw this chart in your week ahead post.

I literally didn't believe it.

And I was like this guy, I was like this guy screwed something up.

Now, we're gonna have to do a big fix this one out as an email, this one out all kinds of ways.

Um and, and to put some numbers and we do the earnings per share here, you know, the $4 um $4.40 on an adjusted basis.

The unadjusted number is $5.89.

That's an $11.9 billion loss to put, you know, dollar figures around it on an adjusted basis.

$8.9 billion loss for BMY in the last quarter, the stocks only down 10% in the last month.

So it was somewhat priced in, it was some of the price.

But with the three stocks we're talking about too in the sector as a whole.

That was sort of interesting as I started looking in this more as you see this and you see the big health care decline and you think, oh, probably one of the worst performing sectors at least in the last month, right?

No health care is actually outperforming the S and P 500 in the last month, marginally 1.4% compared to 1.2% for the S and P. But I think a lot of that has to do with when you look at what happened this quarter, it's not really expected to happen next quarter for the second.

Well, and also if you look at XL V, I mean, Eli Lilly is 12% of the thing.

Plus, you know, Eli Lilly, United and J and J, that's over 20%.

Almost, almost 30% of the ETF right there.

What are the expectations for Q two for Q 2 17% earnings growth year over year for health care would actually be the second best performing sector in the S and P 500 in the coming quarter.

And I do think it gets to with health care.

I don't think the most interesting part of the sector to me is just, there's only a couple of companies there that are really, really interesting.

Right.

And they all have to do probably with G LP ones and then the companies that are dragging this down actually have a lot less to do with the hot trade in the sector.

And so you kind of look at it and you're like, oh, well, and I, I think, you know, the other, the health care and utilities is in this bucket as well.

I know I brought utilities like five times.

These are, I mean, these are defensive, all else sequel, these are defensive type sectors and in this market they've turned into growth sectors basically, right?

Utilities are now in A I play with the new data centers and power and all this kind of stuff and you know, if there's a non A I meme trade out there or you know, like it's G LP one.

Well, in that sense, within health to, to take it a step further too on the utilities thing.

It was interesting talking about earnings and ok, we can explain health care maybe knock trading off because Q two is supposed to be good.

Utilities is the third worst performing sector in earnings this quarter.

It's also supposed to be in the bottom three next quarter.

And so I think over the last week, we've been trying to reason, you know, why is the, why is the sector moving so much?

And we got to this, well, they're undervalued.

People are seeing opportunity there, there's a big, there's a big part of the A I trade in that too.

Absolutely.

Absolutely.

I mean, and I, you know, we sat here at the beginning of the year.

Why are industrials ripping?

And it's like, I don't know, is Trump gonna win all the walls?

Like, no, this is probably an A I related.

Everything's A I, health, health care could be A I, unless it, well, unless it's a, it's either A I or G healthcare has both working for it.

You can get to the A I trade in health care too.

You can use, uh, yeah, sure.

We'll leave that to be on it.

You can use A I to prescribe more GOP one.

You know, it's probably gonna happen sooner than you think happening right now.