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On Friday, UBS analyst Trung Huynh revised the price target for Bristol-Myers Squibb Co. (NYSE:BMY) to $54.00, down from the previous $60.00, while maintaining a Neutral rating on the stock. The company's shares, currently trading at $49.82, have declined nearly 9% over the past week. According to InvestingPro data, the stock's RSI suggests it's in oversold territory, potentially presenting an opportunity for value investors. The adjustment comes as the company faces several challenges ahead of its first-quarter 2025 results. Huynh pointed out that Bristol-Myers Squibb is likely to experience a significant inventory reduction of approximately $500 million and other one-time benefits that boosted the fourth quarter of 2024. These factors are expected to impact the company's performance in the current quarter.
The analyst also noted that the redesign of Medicare Part D could adversely affect sales of higher-priced drugs such as Revlimid, Pomalyst, Orencia subcutaneous, and Camzyos due to changes in catastrophic coverage thresholds. Despite these concerns, Huynh believes that the market has already accounted for these headwinds in the consensus expectations. Bristol-Myers Squibb maintains a strong financial position with a GOOD overall health score from InvestingPro, and has impressively maintained dividend payments for 55 consecutive years, demonstrating resilience through market cycles.
Moreover, UBS suggests that consensus sales forecasts for two of Bristol-Myers Squibb's key products, Eliquis and Revlimid, might be underestimated. Huynh cites IQVIA's prescription tracking data, which indicates robust performance for these drugs, potentially countering anticipated pricing pressures from the Part D redesign. Consequently, UBS projects first-quarter sales of $3.40 billion for Eliquis, slightly above the consensus of $3.34 billion, and $838 million for Revlimid, compared to the consensus of $802 million.
The UBS analysis aligns with consensus on earnings per share (EPS), with both expecting $1.52 for the first quarter of 2025, with results scheduled for April 24. Based on InvestingPro's Fair Value analysis, the stock appears undervalued at current levels. Huynh also highlighted the importance of the early sales trajectory for Cobenfy, Bristol-Myers Squibb's new drug, which will report its first full-quarter results soon. The company generated substantial revenue of $48.3 billion in the last twelve months, maintaining a healthy gross profit margin of 75%. Additionally, the potential expansion of Cobenfy's indications, with results from the Phase 3 ARISE study in adjunctive schizophrenia expected in the second quarter of 2025, could be a pivotal moment for the company. UBS anticipates Cobenfy's first-quarter sales to be in line with consensus expectations, forecasting $17 million against a consensus of $18 million.
In other recent news, Bristol-Myers Squibb has been the focus of several analyst updates and regulatory developments. Goldman Sachs downgraded the company's stock rating from Buy to Neutral, adjusting the price target to $55 from $67. This change reflects concerns about the company's ability to navigate upcoming patent expirations, which could impact revenue streams. Meanwhile, BMO Capital Markets maintained its Market Perform rating with a consistent price target of $61. The firm noted the strong prescription growth of Bristol's schizophrenia drug, Cobenfy, which is expected to generate significant revenue in the first quarter of 2025.
BMO Capital also highlighted upcoming milestones in Bristol-Myers Squibb's late-stage pipeline, including studies in schizophrenia, hypertrophic cardiomyopathy, and Alzheimer's psychosis. These developments are seen as potential catalysts for the company's growth. Additionally, a European regulatory committee endorsed a subcutaneous formulation of Bristol-Myers' cancer drug, Opdivo, for several approved adult solid tumors. This recommendation will now be reviewed by the European Commission, with a decision expected by June 2. The company's efforts to innovate and expand its product offerings are being closely monitored by analysts and investors alike.
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