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On Tuesday, Goldman Sachs revised its stance on Bristol-Myers Squibb Co. (NYSE:BMY), downgrading the pharmaceutical giant's stock rating from Buy to Neutral and lowering the price target to $55 from $67. The adjustment comes as the firm evaluates the company's position in the face of upcoming patent expirations that could impact revenue streams. The company, currently valued at $112.3 billion, has generated $48.3 billion in revenue over the last twelve months. According to InvestingPro analysis, BMY appears undervalued based on its Fair Value metrics.
Goldman Sachs analysts, led by Asad Haider, acknowledged Bristol-Myers Squibb's efforts to navigate through imminent patent cliffs. The company has focused on driving efficiency through substantial cost-cutting measures while also investing in a new growth portfolio. Despite these strategic moves, analysts see a significant challenge ahead as the company attempts to offset expected revenue declines in the coming years. InvestingPro data shows the company maintains strong financial fundamentals with a 75.26% gross profit margin and has maintained dividend payments for 55 consecutive years, demonstrating resilience through market cycles.
The downgrade reflects concerns about the timeframe for Bristol-Myers Squibb's return to growth. While the company is making progress, there is still uncertainty regarding the exact timing of when earnings might bottom out, especially given that the anticipated recovery is part of a multi-year journey. Approvals for new products are increasing, but the exact impact on the company's bottom line remains unclear.
Goldman Sachs' new price target of $55 represents a more conservative outlook compared to the previous target of $67. The firm's analysis suggests that the current stock price has already factored in the potential risks and opportunities facing Bristol-Myers Squibb. For deeper insights into BMY's valuation and growth prospects, including 8 additional ProTips and comprehensive financial analysis, investors can access the full Pro Research Report available on InvestingPro.
The pharmaceutical company has been proactive in its approach to the challenges ahead, making what Goldman Sachs describes as "pragmatic strategic decisions." However, the firm emphasizes that while the magnitude of Bristol-Myers Squibb's loss of exclusivity (LOE) exposure is recognized and considered in the valuation, bridging the forthcoming revenue gaps poses a substantial hurdle within their stock picking framework.
In other recent news, Bristol-Myers Squibb's drug Cobenfy has shown promising prescription growth, with a 9% week-over-week increase reaching 1,573 prescriptions, according to BMO Capital Markets. Analysts at BMO expect Cobenfy to generate approximately $29 million in revenue for the first quarter of 2025, surpassing current consensus estimates by 43%. UBS analysts, maintaining a Neutral rating with a $60 price target, noted a leveling off in prescriptions but still project significant sales for Cobenfy, estimating between $18 million and $21 million for the first quarter. The UBS forecast closely aligns with consensus estimates, suggesting a successful launch compared to similar antipsychotics.
Bristol-Myers Squibb is also navigating potential challenges with upcoming patent expirations for major drugs like Revlimid, Eliquis, and Opdivo. Despite this, a European regulatory committee has endorsed a subcutaneous formulation of Opdivo for multiple solid tumors, with a decision from the European Commission expected by June 2. BMO Capital Markets maintains a Market Perform rating with a $61 price target, emphasizing the significance of upcoming studies in 2025, including the ARISE study in schizophrenia and the Odyssey-HCM study in non-obstructive hypertrophic cardiomyopathy. These developments highlight Bristol-Myers Squibb's ongoing efforts to innovate and sustain growth amid patent expirations.
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