24Q2 net revenue rose 8.7% to $12.2 billion, with a solid gains in Opdivo, Eliquis and a bevy of medicines from BMY’s growth portfolio, more than offsetting an LOE-related decline in Revlimid. Growth portfolio net revenues rose 17% sequentially and 26% YOY, with triple-digit gains in Camzyos and Sotyktu and 50% gains in Opdualag, Zeposia and Breyanzi. GAAP EPS of $0.83 was 16% below 23Q2, but in line with my estimate. The decline in earnings was due to impairment charges taken against two products and higher acquisition-related costs. Non-GAAP EPS of $2.07 was better than last year’s $1.75 and above my estimate of $1.88.
With half the year now on the books, management narrowed and raised its outlook for revenue growth, gross margin and reduced its estimate for other expense. It now anticipates 2024 non-GAAP diluted EPS of $0.60-$0.90, up from its previous guidance of $0.40-$0.70.
I have adjusted my projections accordingly. They now show a GAAP loss of $3.50 per share, with all of that loss having been recorded already in 24Q1 as a result of the write-off of $12.2 billion of acquired IPRD associated mostly with its acquisition of Karuna Therapeutics. My 2024 non-GAAP EPS, which also reflects that write-off, is $0.87, at the high end of management’s guidance range. For 2025, I project GAAP EPS of $4.51 and non-GAAP EPS of $7.02. My 2025 projections do not factor in any additional acquisitions or R&D investments, which seem likely, even though BMY is focused for the time being on reducing debt.
Based upon my 2025 outlook, I am maintaining my price target of $56 for BMY’s stock. That equates to a one-year forward multiple of 12.5 times projected 2025 GAAP EPS of $4.51 or 7.5 times projected non-GAAP EPS of $7.02. Both multiples are well below peer group averages. The price target represents a potential total return of nearly 20% from today’s closing price of $48.77. Accordingly, I am raising my performance rating from “2” (Outperform) to “1” (Buy).
BMY’s stock is up sharply since the beginning of July from its low around $39. Having gapped up on earnings, the stock may struggle to hold on to those gains in the near term as the market swoons. The positive reaction of investors was due both to its favorable 24Q2 report, which showed that key medicines in the growth portfolio are finally gaining traction, and also management’s expressed confidence in its ability to navigate the impact of the negotiations with the government on the pricing of Eliquis. After being down as much as 20%, the stock is now flat for the year, but it is still well below its November 2022 peak of $75.
This is a summary of my recent 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.
August 7, 2024 (Report published on August 2, 2024.)
Stephen P. Percoco
Lark Research
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© 2015-2024 by Stephen P. Percoco, Lark Research. All rights reserved.
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