Should You Pick Bristol Myers Squibb Stock At $57?
Bristol Myers Squibb (NYSE: BMY) exceeded market expectations in its fourth quarter, reporting revenue of $12.3 billion and adjusted earnings per share of $1.67, comfortably beating the consensus forecasts of $11.6 billion and $1.46, respectively. The company continued to benefit from its anticoagulant – Eliquis. However, its 2025 outlook was dim, partly due to currency headwinds. Still, it didn’t bode well for its stock, down 3% last week.
Bristol Myers Squibb’s revenue of $12.3 billion in Q4 reflects an 8% y-o-y rise. This was driven by a 21% rise in the company’s growth portfolio, while the legacy portfolio was down 4%. Within legacy, Eliquis sales were up 11%, Revlimid down 8%, and Sprycel sales plunged 62%. Looking at the growth portfolio, Reblozyl sales were up a solid 71%, Opdualag sales up 34%, while Breyanzi and Camzyos sales were up over 2x y-o-y.
Bristol Myers Squibb saw a 260 bps decline in adjusted operating margin to 34.3% in Q4. This weighed on its bottom line, which came in at $1.67 on an adjusted basis, compared to $1.70 in the prior-year quarter. Looking forward, the company expects its sales to be $45.5 billion and adjusted earnings of $6.70 (at the mid-point of the provided range), lower than the street estimates of $47.4 billion and $6.92, respectively. The company’s forecast incorporates an anticipated $500 million revenue reduction due to unfavorable foreign exchange rates. The company’s management stated that it plans to deepen its cost-cutting measures, targeting $2 billion in savings through 2027. Bristol Myers Squibb expects $1.5 billion in cost savings this year.
Looking at BMY stock, it has seen a rise of 18% since the beginning of 2024, underperforming the broader S&P 500 index, up 26%. If we look at a slightly longer time frame, the performance of BMY stock with respect to the index over the recent years has been quite volatile. Given the current uncertain macroeconomic environment around rate cuts and ongoing trade wars, could BMY underperform the S&P or will it see a strong jump?
While we will soon update our model for Bristol Myers Squibb to reflect the latest results, we think its stock appears to have some room for growth. At its current levels of $57, BMY is trading at 2.4x trailing revenues, versus the stock’s average P/S ratio of 2.9x over the last five years. We believe the company’s commitment to cost savings, combined with the significant progress in its growth portfolio, makes the current decline in the valuation multiple unwarranted. We think that the current pullback in valuation multiple presents an attractive entry point for long-term investors seeking robust long-term returns.
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