Should You Pick Bristol Myers Squibb Stock At $55?

Bristol Myers Squibb (NYSE: BMY) recently reported its Q3 results, with revenues and earnings exceeding the street estimates. It reported revenue of $11.9 billion and adjusted earnings of $1.80 per share, compared to the consensus estimates of $11.3 billion and $1.49, respectively. The company also raised its full-year outlook and its stock reacted positively, with over 6% gains in a week. In this note, we discuss key takeaways from Bristol Myers Squibb’s recent results and its valuation.

How Did Bristol Myers Squibb Fare In Q3?

Bristol Myers Squibb’s revenue of $11.9 billion in Q3 reflects an 8% y-o-y rise. This was driven by an 18% rise in the company’s growth portfolio, while the legacy portfolio was up 1%. Within legacy, Eliquis sales were up 11%, Revlimid down 1%, and Sprycel sales plunged 44%. Looking at the growth portfolio, Reblozyl sales were up 80%, Opdulag sales up 40%, while Breyanzi and Camzyos sales were up over 2x y-o-y.

Bristol Myers Squibb saw a marginal 20 bps decline in adjusted operating margin to 39.6% in Q3. Its bottom line stood at $1.80 on an adjusted basis, compared to $2.00 in the prior-year quarter. The bottom-line figure includes a $0.09 per share charge related to acquired IPR&D charges and licensing income.

Looking forward, the company raised its full-year 2024 outlook. It now expects its sales to rise by 5%, versus a low single-digit rise earlier, and its adjusted earnings to be in the range of $0.75 and $0.95, versus the prior guidance of $0.60 and $0.90. We forecast the sales to be around $47.2 billion and earnings to be $0.94 per share, toward the higher end of the company’s provided guidance. Note that Bristol Myers Squibb recorded a one-time charge of $12.1 billion for the acquisition of Karuna in Q1’24, and expects its full-year earnings to be much lower than the $7.51 earnings per share it reported in 2023.

What Does This Mean For BMY Stock?

An upbeat quarter and upward revision in the outlook boded well for BMY stock, up 6% in a week. We estimate Bristol Myers Squibb’s Valuation to be $63 per share, around 12% higher than its current levels of around $56. At its current levels, BMY stock is trading at 2.4x trailing revenues, versus its average P/S ratio of 2.9x over the last three years. We think there is some room for growth for BMY stock from  here.

BMY stock has risen 14% this year, underperforming the broader markets, with the S&P500 index up 20%. Notably, the performance of BMY stock with respect to the index over the recent years has been quite volatile. Returns for the stock were 3% in 2021, 19% in 2022, and -26% in 2023. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is less volatile. And it 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.

While BMY stock looks like it has some room for growth, 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 11/6/2024
[2] Cumulative total returns since the end of 2016

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