22Q3 revenue declined 3.5% to $11.2 billion, mostly because of a drop in Revlimid sales due to patent expiry. GAAP EPS increased 8.5% to $0.75, but that was slightly below my estimate of $0.77, due mostly to a higher income tax provision. Non-GAAP EPS of $1.99 was above 21Q3’s $1.93 and my estimate of $1.84, as more expense items were classified as specified and thus excluded in the calculation of Non-GAAP net income and EPS.
Management reduced its 2022 GAAP EPS guidance by $0.17 to $2.54-$2.84, but left its non-GAAP EPS guidance unchanged at $7.44-$7.74. The decrease in the GAAP guidance reflects a higher expected effective tax rate and higher expected operating expenses (which will be classified as specified items). My projections anticipate 2022 GAAP EPS of $2.67 and non-GAAP EPS of $7.63.
BMS’s plan to more than replace the revenues and earnings of drugs losing exclusivity with new products sourced internally or through acquisitions is on track. Management is upbeat about the prospects for recently launched drugs such as Opdualag, Camzyos and Sotyktu, and its mid- and late-stage pipelines, which now include repotrectinib, a proposed treatment for non-small cell lung cancer and advanced solid tumors, from the acquisition of Turning Point Therapeutics.
BMS’s stock (BMY) outperformed the market during the September sell-off and has performed in line as the market has bounced back in October. Although the stock remains cheap to peers on forward non-GAAP earnings, it is expensive on GAAP earnings. Based upon its recent performance and valuation, I am maintaining my neutral rating and price target of $80. My price target represents a potential 12-month total return of 6.8%, including the stock’s 2.8% dividend yield.
This is a summary of my recent update report on Bristol-Myers Squibb Company (BMY). To obtain a copy of the full report, please reach out to me using the contact information provided below.
October 29, 2022
Stephen P. Percoco
Lark Research
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