On Tuesday, Deutsche Bank (ETR:DBKGn) adjusted its outlook on Bristol-Myers Squibb Co. (NYSE:BMY), reducing the price target to $45 from the previous $53 while retaining a Hold rating on the stock. The revision follows the release of second-quarter figures that suggest revenues might slightly exceed the Bloomberg consensus of approximately $11.5 billion, with an estimated $11.6 billion. However, the company's non-GAAP earnings per share (EPS) of $1.58 fell short by $0.03.
The analyst noted that the shortfall in earnings might partly be attributed to underestimated expenses in in-process research and development (IPR&D). Bristol-Myers Squibb reported $132 million in IPR&D costs, while Wall Street projections only accounted for $105 million. Additionally, the transaction data for Bristol-Myers Squibb's growth portfolio in the second quarter appeared weak, potentially impacting the company's stock performance.
Despite these challenges, the firm's full-year 2024 revenue guidance is expected to remain stable, with a low single-digit percentage increase. Industry insights from Johnson & Johnson and Novartis (LON:0QLR) (SIX:NOVN) regarding the Inflation Reduction Act (IRA) suggest that pricing negotiations are consistent with their long-term guidance, which could bode well for Bristol-Myers Squibb when it updates its guidance on the IRA's impact in September.
The upcoming PDUFA date for KarXT, a treatment for schizophrenia, is set for September 26, 2024. Deutsche Bank forecasts that KarXT could generate $3 billion in revenue by fiscal year 2030, adjusted for probability.
However, the bank also cautions that Bristol-Myers Squibb's pipeline is still evolving, and while there may be some opportunistic buying by long-only investors, realizing the stock's attractive valuation in the near to medium term could prove difficult until a clearer revenue and EPS outlook is established.
In other recent news, Bristol Myers Squibb has seen a slew of developments. The European Medicines Agency (EMA) has validated the company's application for Opdivo in combination with Yervoy as a first-line treatment for adults with advanced hepatocellular carcinoma. This follows the FDA's approval of the company's combination therapy, including the oral drug Krazati, for treating colorectal cancer in patients with a specific genetic mutation.
Additionally, the EMA is reviewing the company's application for a subcutaneous injection form of Opdivo, which could significantly reduce treatment time for patients. In personnel news, Bristol Myers Squibb has expanded its Board of Directors with the appointment of Michael R. McMullen, a seasoned executive with more than two decades of experience in executive roles.
However, the company, along with Sanofi (EPA:SASY) (NASDAQ:SNY), has been ordered to pay over $916 million to the state of Hawaii due to allegations of failure to adequately warn non-white patients about potential health risks associated with the blood thinner Plavix.
Both companies plan to appeal the decision. Despite this, Citi maintained its Buy rating on Bristol Myers Squibb, citing the company's financial health and the potential of its pipeline. These are the recent developments at Bristol Myers Squibb.
InvestingPro Insights
As Bristol-Myers Squibb Co. (NYSE:BMY) navigates through a mixed financial landscape, with some analysts revising earnings downward, it's essential to consider key financial metrics and strategic moves that could influence the company's valuation and investor sentiment. The company's aggressive share buyback strategy and its notable dividend, which has been maintained for 54 consecutive years, underscore management's confidence in its financial health and commitment to shareholder returns. With a significant dividend yield of 5.62% and a dividend growth of 5.26% in the last twelve months as of Q1 2024, Bristol-Myers Squibb stands out as a potential income-generating investment.
The company's valuation reflects a strong free cash flow yield, which is an encouraging sign for investors looking for companies with the ability to generate cash. Moreover, with a relatively low price volatility, Bristol-Myers Squibb may appeal to investors seeking stability in their portfolios. Despite some challenges, such as a slight revenue decline of 0.68% in the last twelve months as of Q1 2024, the company's robust gross profit margin of 76.03% suggests efficiency in maintaining profitability.
For those interested in further analysis and additional insights, there are more InvestingPro Tips available for Bristol-Myers Squibb, including detailed assessments of the company's financial health and market position. To explore these insights and make informed investment decisions, consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at InvestingPro.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.