Bristol Myers Squibb (NYSE: BMY) recently reported its Q4 results, surpassing street estimates with revenue of $11.5 billion and adjusted earnings of $1.70 per share. This exceeded consensus estimates of $11.2 billion in sales and $1.53 profit per share. Despite facing near-term challenges from biosimilar competition for Revlimid, analysts believe BMY stock has significant growth potential.
Over the past three years, BMY stock has experienced fluctuations, declining 15% from early 2021 levels of $60 to around $50 currently. While the stock underperformed the S&P 500 in 2021 and 2023, it outperformed in 2022. Comparatively, the Trefis High Quality Portfolio, consisting of 30 stocks, consistently outperformed the S&P 500 during the same period, showcasing better returns with lower risk.
Looking ahead, analysts project a positive outlook for BMY stock, estimating a valuation of $65 per share, indicating a potential 30% upside from its current price. This valuation is based on a 9x P/E multiple and expected earnings of $7.20 per share for the full year 2024, aligning with the stock's historical average.
In Q4, Bristol Myers Squibb's revenue increased by 1% year-over-year, driven by market share gains for drugs like Eliquis and newer offerings such as Camzyos and Opdualag. However, sales of Revlimid declined by 36% due to biosimilar competition. Despite this, the company anticipates strong sales for newer drugs like Camzyos, Sotyktu, and Opdualag, each expected to surpass $1 billion in sales by 2026.
While the company's adjusted gross margin decreased to 76.4% in Q4'23, Bristol Myers Squibb remains optimistic about its 2024 outlook, forecasting low single-digit sales growth and adjusted earnings between $7.10 and $7.40 per share, slightly above street estimates.
Despite short-term challenges, Bristol Myers Squibb's long-term growth prospects appear promising, with newer drugs poised to become blockbusters. The company's recent acquisitions, including Mirati, Karuna, and RayzeBio, are expected to bolster its pipeline. With BMY stock currently undervalued, investors may view the current dip as an opportunity for substantial long-term gains.
