Expect Bristol-Myers Squibb To Post Steady Growth In Q3 Led By Opdivio And Eliquis

Bristol-Myers Squibb (NYSE:BMY) is scheduled to announce its Q3 earnings on October 26. We expect the company to post steady growth led by its oncology and cardiovascular division, primarily from Opdivio and Eliquis. These two drugs combined saw a 3x year-on-year jump in revenues in 2016, and in the first half of 2017 the revenues were up 50% compared to the prior year period. However, the growth is likely to moderate in the coming quarters. Opdivo was unsuccessful in its Phase 3 clinical trials aimed to test its application in the first-line treatment of lung cancer. This likely reduces the drug’s target market and expected peak sales. Also, Opdivo’s lung cancer turf is expected to see greater competition from Roche and Merck this year and beyond.

However, on the positive side, we expect Opdivo to increase its penetration in head and neck cancer in the U.S. and in classical Hodgkin’s lymphoma in the EU and Japan. Also, last month, the company reported that a study looking at a combination of two oncology drugs – Opdivo and Yervoy – in the treatment of renal-cell cancer worked well enough to be stopped early. This is a positive development for the company, and if the drug combination is approved, it would result in a higher contribution of oncology revenues for Bristol-Myers Squibb.

Looking at other drugs, we expect Empliciti to ramp up well in the coming quarters. In addition, Eliquis is likely to continue its expansion in the U.S., albeit at a slower rate compared to last year. The growth will primarily be led by higher demand given the drug’s increased acceptance and market share gains. Eliquis has become a leading anticoagulant in new-to-brand prescriptions among cardiologists in the U.S., gaining strong traction among physicians for atrial fibrillation. Overall, Bristol-Myers Squibb will likely either have to get a breakthrough in first-line treatment of lung cancer in order to drive future revenue growth, or it needs one of its research collaborations to create a new drug in some potentially profitable therapeutic areas such as rare and autoimmune diseases.

Our current price estimate for Bristol-Myers Squibb stands at $52, implying a discount of around 20% to the current market price.

See our complete analysis for Bristol-Myers Squibb

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