Growth Portfolio Will Likely Drive Bristol Myers Squibb’s Q2

Bristol Myers Squibb (NYSE: BMY) is scheduled to report its Q2 2024 results on Friday, July 26. We expect BMY stock to trade higher, with its revenue and earnings likely exceeding the street estimates. The company should benefit from continued market share gains for its growth portfolio drugs, including Reblozyl, Breyanzi, and Orencia. Looking at its stock, we find BMY to have some room for growth, as discussed below. Our interactive dashboard analysis of Bristol Myers Squibb Earnings Preview has additional details.

BMY stock has faced a notable decline of 25% from levels of $60 in early January 2021 to around $45 now, vs. an increase of about 45% for the S&P 500 over this period. However, the decrease in BMY stock has been far from consistent. Returns for the stock were 1% in 2021, 15% in 2022, and -29% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 — indicating that BMY underperformed the S&P in 2021 and 2023.

In fact, consistently beating the S&P 500 — in good times and bad — has been difficult over recent years for individual stocks; for heavyweights in the Health Care sector including UNH and JNJ, and even for the megacap stars GOOG, TSLA, and MSFT. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could BMY face a similar situation as it did in 2021 and 2023 and underperform the S&P over the next 12 months — or will it see a recovery? From a valuation perspective, BMY stock looks like it has some room for growth. We estimate Bristol Myers Squibb’s Valuation to be $50 per share, reflecting over 10% upside from its current levels of $45. Our forecast is based on a valuation multiple of 2.3x revenues, slightly lower than the 2.8x average P/S over the last three years. A slight decline in valuation multiple for Bristol Myers Squibb seems justified in our view, given an increased biosimilar competition for some of its drugs. Bristol Myers Squibb’s adjusted earnings are expected to be $0.55 per share in 2024, compared to $7.51 in 2023. This can be attributed to the charges related to the Karuna acquisition.

Looking at the previous quarter, Bristol Myers Squibb’s revenue of $11.9 billion in Q1 was up 5% y-o-y, as lower sales of Revlimid were more than offset by higher sales of Eliquis, Reblozyl and Opdualag. While the company expects Revlimid sales to continue to erode sharply, some of its newer drugs, such as Camzyos, Sotyktu, and Opdualag, are expected to garner sales of over $1 billion each by 2026.

Bristol Myers Squibb’s adjusted gross margin declined by 230 bps y-o-y to 77.8% in Q1’24, partly due to product mix. Bristol Myers Squibb recorded a one-time charge of $12.1 billion for the acquisition of Karuna. This resulted in the company’s bottom-line plunging to a loss of $4.40 on an adjusted basis, compared to earnings of $2.05 per share in the prior-year quarter.

Coming to the latest quarter, we expect sales to trend higher, led by its growth portfolio. In the legacy portfolio, Eliquis sales will likely see continued growth from market share gains. The company’s overall sales will likely be around $11.6 billion, up 3% y-o-y. The company may continue to face pressure on its gross margins in the near term. We expect the earnings to come in at $1.65 per share, lower than the $1.76 it reported in the prior-year quarter.

Overall, Bristol Myers Squibb will likely report an upbeat Q2, and its stock appears to have some room for growth. While BMY stock looks like it may see higher levels, it is helpful to see how Bristol Myers Squibb’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

[1] Returns as of 7/25/2024
[2] Cumulative total returns since the end of 2016

Invest with Trefis Market-Beating Portfolios
See all Trefis Price Estimates