22Q4 revenue declined 4.8% to $11.4 billion, more than 22Q3’s decline, mostly because of a drop in Revlimid sales due to patent expiry. GAAP diluted EPS was $0.95, down from $1.07 last year but ahead of my estimate of $0.67, due mostly to lower IPRD and intangibles amortization costs. Non-GAAP EPS of $1.82 was slightly below 21Q4’s $1.84, but also above my estimate of $1.75.
2022 full year EPS was in line with management’s guidance. For 2023, BMY expects revenue growth of 2%, as a further decline in Revlimid sales should be more than offset by gains in Eliquis, Opdivo and new products. GAAP EPS guidance is set at $4.03-$4.33 and non-GAAP EPS at $7.95-$8.25. My projections anticipate 2023 GAAP EPS of $4.08, up from $3.71 previously, and non-GAAP EPS of $8.04, up slightly from my previous estimate of $8.00. For 2024, I project GAAP EPS of $4.67 and non-GAAP EPS of $8.40.
Although management was pleased with 2022’s financial performance and reaffirmed its long-term growth targets, its 2023 guidance implies, according to my model, slower revenue growth, a lower gross margin and higher operating costs, offset by lower amortization costs and an increase in other income. The company should also get a modest EPS boost from share buybacks in 2023. Thus, the guidance suggests at least modest near-term downside pressure on core profitability, with a continuing slow ramp in Sotyktu and Camzyos sales. Even so, the growth potential in those new products still appears to be intact; so 2024 results should show greater improvement, as reflected in my 2024 projections.
BMS’s stock has underperformed both the market and peers since October. Its valuation discount vs. peers has therefore widened. Assuming a modest pickup in revenue growth and profitability in 2024, the stock’s discount vs. peers should narrow. Thus, I am maintaining my price target of $80, which equates to a one-year forward non-GAAP P/E multiple of 9.5, well below the peer group average of 14.0 times. With the recent decline in the stock price, my price target represents a potential total return of 20%, including the stock’s 3.3% dividend yield. That merits a performance rating of “1” (Strong BUY), up from “3” (Neutral).
This is a summary of my recent update report on Bristol-Myers Squibb Co. (BMY). To obtain a copy of the complete report, please reach out to me using the contact information provided below.
April 6, 2023
Stephen P. Percoco
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