Bristol Stock- Bristol Myers Stock Skeptic Upgrades to a Buy. Here’s Why.
Bristol Myers Squibb
portfolio of immune-unleashing drugs against cancer has been outsold by the rival
juggernaut Keytruda, and Guggenheim analyst Seamus Fernandez had some of the Street’s lowest expectations for Bristol’s cancer-drug sales. But recent clinical-trial successes for Bristol’s immuno-oncology drug Opdivo have changed the analyst’s mind.
In a Monday morning note, Fernandez raises his rating on Bristol stock (ticker: BMY) to Buy from Neutral, saying that the shares could rise to $70 and beyond from a recent $61. In Monday morning trading, the stock was up 1.5% to $62.16.
“Our Street-low Opdivo forecasts are no longer justified,” writes Fernandez. “[Bristol Myers Squibb] is a multiple expansion story with limited near-term downside risk.”
A series of clinical trials have shown Opdivo’s effectiveness against cancers of the bladder, stomach, kidney, esophagus, and lungs. Potential new indications for the Bristol drug persuaded the analyst to add $3.5 billion to his sales forecast for the drug. He thinks Opdivo revenue could rise to a peak of $15 billion in 2028 from $6.9 billion in 2020.
Other products will also add sales, says Fernandez, including an investigational autoimmune treatment for psoriasis whose Phase 3 trial should yield results in coming months.
Bristol stock has been trading at the lowly multiple of 8-times earnings. As growth returns to its Opdivo sales, Fernandez sees its 2021 earnings per share hitting $7.37, and the earnings multiple rising to at least 9.5 times. That should lift Bristol’s stock price to at least $70, he predicts, with potential for the stock to go as high as $78.
Write to Bill Alpert at [email protected]