22Q2 revenues were higher, GAAP earnings lower and non-GAAP earnings higher than anticipated. Management reduced its 2022 revenue guidance by $1 million to $46 billion due to foreign currency headwinds. It also lowered its GAAP EPS guidance, but left its non-GAAP EPS guidance unchanged. The GAAP earnings change is due to higher expected specified items, either losses on equity investments or acquisition costs, which do not affect non-GAAP results.
On balance, the company’s plan to more than replace the revenues and earnings of drugs that are losing exclusivity with new products sourced internally or through acquisitions is on track. Possible headwinds from the loss of exclusivity in certain geographies for Eliquis and a slower-than-anticipated launch of Camzyos (mavacamten) may delay progress; but BMS will gain another late stage oncology candidate with the planned acquisition of Turning Point Therapeutics in 22Q3.
After significantly outperforming the broader market earlier in the year and achieving my previous price target of $73 much sooner than anticipated, I downgraded my performance rating on the stock to neutral in April. Since then, the stock continued to outperform during the June market sell-off, but it has recently underperformed as the market has rebounded. With a higher probability of market rotation out of this year’s outperformers if the market continues to rebound, I am maintaining my neutral rating on the stock, but raising my price target to $80. At that price, the stock trades at 21.5 times projected 2023 GAAP earnings of $3.73 (or 10.0 times projected 2023 non-GAAP earnings of $8.00). My price target represents a potential total return of 10%, including the stock’s 2.9% dividend yield.
This is a summary of my recent report on Bristol-Myers Squibb Company (BMY). To obtain a copy of the report, reach out to me using my contact information listed below.
August 1, 2022
Stephen P. Percoco
Lark Research
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