24Q3 net revenue rose 8.4% to $11.9 billion, with gains in Eliquis, Reblozyl, Breyanzi and Opdivo as well as other medicines from BMY’s growth portfolio more than offsetting an LOE-related decline in Sprycel. Growth portfolio net revenues rose 4% sequentially and were up 25% YOY. GAAP EPS of $0.60 was below 23Q3’s $0.93 and also below my estimate of $0.73. The decline in earnings was due mostly to a $492 million negative swing in other (income)/expense and a higher acquired in-process R&D charge. Non-GAAP EPS of $1.80 was below last year’s $2.00 but above my estimate of $1.58.
Based upon 24Q3 results, management raised its 2024 outlook for revenue growth to about 5% (from about 4%) and non-GAAP diluted EPS to $0.75-$0.95 from $0.60-$0.90. Thus, I now anticipate 2024 revenues of $47.2 billion, up 4.9%, a GAAP loss of $3.90 per share (due to the $12.2 billion acquired IPRD write-off from the Karuna Therapeutics acquisition in 24Q1) and non-GAAP EPS of $0.93. For 2025, I project $47.7 billion of revenues, up 1.0%, GAAP EPS of $4.50 and non-GAAP EPS of $7.00, all little changed from my last report.
BMY has high hopes for Cobenfy, a first in class treatment for schizophrenia, which came with Karuna and received FDA approval in September. With its superior safety and efficacy profile, Cobenfy looks like a sure bet to generate revenue in excess of $1.0 billion, perhaps even approaching BMY’s previous schizophrenia blockbuster, Abilify, which had peek sales of $7.5 billion. The company is also optimistic about other pipeline candidates, including Milvexian (a cardiovascular medicine), subcutaneous Opdivo (which has a Dec. 29 FDA PDUFA date) and its CD19 Nex-T cell therapy.
Since my last report, BMY’s stock has rebounded 13.7%. better than the S&P 500’s 6.9% gain and the 4.0% drop in the NYSE ARCA Pharmaceutical Index ($DRG). The stock advanced sharply during September, but gave up ground in October until it reported 24Q3 results on October 31, which were well received by investors.
Based upon the stock’s recent advance, my 2025 outlook and BMY’s pipeline progress, I am raising my price target from $56 to $61. That equates to a one-year forward multiple of 13.6 times projected 2025 GAAP EPS of $4.50 or 8.7 times projected non-GAAP EPS of $7.00. My assumed non-GAAP multiple is below the peer group average of 11.5 times, so the stock has recovery potential beyond my $61 price target. (In fact, BMY traded above $70 before April 2023.) Along with its 4.9% dividend yield, the price target represents a potential total return of 14.3% from today’s $55.45 closing price. Accordingly, I am raising my performance rating from “3” (Neutral) to “2” (Outperform).
This is a summary of my recent update report on Bristol-Myers Squibb Company (BMY). To obtain a copy of the report, please reach out to me using the contact information provided below.
November 18, 2024 (Report published on November 4, 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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