What To Expect From Bristol Myers Squibb’s Q4?

by Trefis Team
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  • Bristol Myers Squibb (NYSE: BMY) is scheduled to report its Q4 2020 results on Thursday, February 4. We expect the company to likely post revenue and earnings slightly below the consensus estimates, partly due to slowing sales growth rate of Opdivo. That said, Bristol Myers Squibb should see an overall pickup in demand due to an increase in hospital visits with economies opening up gradually. We expect the company to navigate well based on these trends over the latest quarter.

While Bristol Myers Squibb may report earnings slightly below the consensus estimates, our forecast indicates that its valuation is around $79 per share, which is 25% above the current market price of around $63. Our interactive dashboard analysis on Bristol Myers Squibb’s Pre-Earnings has additional details.

(1) Revenues expected to be slightly below the consensus estimates

Trefis estimates Bristol Myers Squibb’s Q4 2020 revenues to be around $10.6 billion, slightly below the $10.7 billion consensus estimate. While the deferment of elective surgeries and hospital visits for non-emergency cases impacted the sales of pharmaceutical companies earlier in 2020, the gradual opening up of economies and growth in number of elective procedures is likely to have aided sales in Q4. The company is likely to see continued market share gains for its blockbuster drugs, Eliquis and Revlimid, while Opdivo, which has seen its sales actually decline 2% in the last quarter, may continue to lose share to Merck’s Keytruda. Bristol Myers Squibb’s Q3 2020 sales were up 75% y-o-y to $10.5 billion, primarily reflecting the impact of the Celgene acquisition. Our dashboard on Bristol Myers Squibb Revenues offers more details on the company’s segments.

2) EPS also likely to be slightly below the consensus estimates

Bristol Myers Squibb’s Q4 2020 adjusted earnings per share (EPS) is expected to be $1.32 per Trefis analysis, compared to $1.41 as per the consensus estimate. Bristol Myers Squibb’s adjusted net income of $11.4 billion in Q3 2020 reflected a 2x rise from its $5.8 billion figure in the prior-year quarter, due to the impact of the Celgene acquisition. The margins will likely improve going forward, as the current Covid-19 crisis subsides. For the full year 2020, we expect the adjusted EPS to be higher at $6.30 compared to $4.69 in 2019.

(3) Stock price estimate higher than the current market price

Going by our Bristol Myers Squibb’s Valuation, with an EPS estimate of around $6.30 and a P/E multiple of around 12x in 2020, this translates into a price of $79, which is 25% above the current market price of around $63. The 12x figure is slightly lower than levels of around 13x seen over the recent years.

Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year.

While BMY stock may have more room for growth, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Pfizer vs Merck.

See all Trefis Price Estimates and Download Trefis Data here

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