On Tuesday, Leerink Partners issued an upgrade for Bristol-Myers Squibb Co. (NYSE:BMY) stock, changing its rating from Market Perform to Outperform and increasing the price target from $55.00 to $73.00. The firm believes that the upward revision of consensus expectations for Cobenfy (KarXT) and milvexian, a novel blood thinner, will likely lead to the stock's outperformance.
The upgrade is based on the anticipation that these products will drive the company's revenue and earnings per share (EPS) growth. Leerink has raised its five-year compound annual growth rate (CAGR) forecast for Bristol-Myers' revenue from 2025 to 2030 from 0% to 1%, and for EPS from 1% to 3%.
The new 2030 revenue estimate is 33% above the consensus of $37.3 billion, and the EPS forecast is 57% higher than the consensus estimate of $5.29.
Despite Bristol-Myers' shares having significantly outperformed since June 30, 2024, with an increase of 44% compared to the Drug Index's decrease of 6%, Leerink noted that only 23% of sell-side ratings are Buy/Outperform as of November 11, 2024. The firm's optimism is further bolstered by the lack of anticipated competition from ABBV's emraclidine, following its pivotal Phase 2 trial failures.
As a result, Leerink has significantly increased its long-term projections for Cobenfy, including a 36% rise in its 2030 sales forecast, from $4.2 billion to $5.7 billion.
Leerink also sees potential for Cobenfy to exceed $10 billion in peak sales if it is successful in additional indications. This is compared to LLY's Zyprexa, which generated $5 billion in peak revenue in 2010 at much lower prices. Following a positive trial update announced in the third-quarter call, Leerink has raised its 2030 sales projection for milvexian by 26%, from $3.1 billion to $3.9 billion.
The firm suggests that if milvexian demonstrates a superior benefit-risk profile in its Phase 3 atrial fibrillation trial expected in early 2027, its peak sales could surpass the 2025 sales estimate of $14.4 billion for Eliquis.
In conclusion, Leerink sees milvexian's Phase 3 trials in secondary stroke prevention and acute coronary syndrome as additional potential benefits at the current stock price.
Although EPS growth may be constrained through 2029 due to the loss of exclusivity for Eliquis and Opdivo in 2028, Bristol-Myers is expected to face less pressure from loss of exclusivity in 2030 and beyond compared to peers. Leerink's model for Bristol-Myers extends to 2032, projecting a three-year CAGR for EPS from 2029 to 2032 at 10%.
In other recent news, Bristol-Myers Squibb (BMS) has reported significant growth in its third-quarter earnings, with a 20% increase in its growth portfolio revenues. The company also revised its full-year 2024 revenue growth projection to around 5% from the previous estimate of approximately 4%, driven by strong performance in cell therapy, Camzyos, and its legacy business.
In addition to these financial highlights, BMS has made strides in clinical trials. The company reported promising news regarding milvexian, a novel Factor XIa blood thinner, and the FDA approval of Cobenfy, a new treatment for schizophrenia. Furthermore, BMS's Phase 3 EMERGENT-4 and EMERGENT-5 trials have shown sustained improvements in schizophrenia symptoms over a 52-week period with COBENFY treatment.
BMS also recently acquired Karuna Therapeutics (NASDAQ:KRTX), aiming to enhance long-term growth with ongoing trials in schizophrenia and Alzheimer's. BMS plans to initiate three Phase 3 studies in 2024 and present Phase 1 data for CD19 NEX-T cell therapy.
These recent developments reflect BMS's commitment to growth and innovation.
InvestingPro Insights
Bristol-Myers Squibb's recent stock upgrade aligns with several key metrics and insights from InvestingPro. The company's market capitalization stands at $121.33 billion, reflecting its significant presence in the pharmaceutical industry. Despite recent challenges, InvestingPro data shows a strong revenue of $47.44 billion over the last twelve months, with a notable revenue growth of 5.56% during the same period.
InvestingPro Tips highlight that Bristol-Myers Squibb has maintained dividend payments for an impressive 54 consecutive years, demonstrating financial stability. This is further supported by the current dividend yield of 4.01%, which may attract income-focused investors. The company's stock has shown robust performance recently, with a 28.54% price total return over the past three months and a 36.65% return over six months, aligning with Leerink's observation of significant outperformance since June 2024.
While the article focuses on future growth prospects, it's worth noting that InvestingPro Tips indicate that 11 analysts have revised their earnings downwards for the upcoming period. This contrasts with Leerink's optimistic outlook, suggesting a diversity of opinions in the market. Investors seeking a more comprehensive analysis can access 14 additional tips on InvestingPro, providing a broader perspective on Bristol-Myers Squibb's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.