Bristol Myers Squibb (NYSE: BMY) is scheduled to report its Q2 2021 results on Wednesday, July 28. We expect the company to likely post revenue and earnings slightly above the consensus estimates, primarily led by continued market share gains for its anticoagulant Eliquis, cancer drug Yervoy, and rheumatoid arthritis drug Orencia. Overall, Bristol Myers Squibb should see a pickup in demand, due to an increase in hospital visits with Covid-19 vaccination rates going up steadily. We expect the company to navigate well based on these trends over the latest quarter.
Furthermore, we also think BMY stock remains attractive at the current levels. Trefis’ forecast indicates that Bristol Myers Squibb’s valuation is around $80 per share, which is 17% above the current market price of around $68. Our interactive dashboard analysis on Bristol Myers Squibb’s Pre-Earnings has additional details.
(1) Revenues expected to be above the consensus estimates
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Trefis estimates Bristol Myers Squibb’s Q2 2021 revenues to be around $11.5 billion, slightly above the $11.3 billion consensus estimate. For Bristol Myers Squibb in Q2 2020, sales growth was adversely impacted, given the lockdowns due to the spread of Covid-19. Now that nearly half of the U.S. population is fully vaccinated, and on the international front, most of the countries have undertaken large-scale vaccination programs, the healthcare institutions now have more resources to address non-Covid related patient visits, as well as address the elective surgeries that were postponed earlier. People are also more confident heading out, compared to the lockdowns in Q2 last year, implying a rebound for Bristol Myers Squibb’s business. In fact, the company’s total revenue was also up 3% in Q1 this year.
Looking at individual drugs – Eliquis, Yervoy, and Orencia – sales were up (y-o-y) 9%, 15%, and 6%, respectively, while its top-selling drug – Revlimid – was up 1% to $2.9 billion in Q1 2021. Our dashboard on Bristol Myers Squibb Revenues offers more details on the company’s segments.
2) EPS also likely to be slightly above the consensus estimates
Bristol Myers Squibb’s Q2 2021 adjusted earnings per share (EPS) is expected to be $1.96 per Trefis analysis, compared to $1.91 as per the consensus estimate. Bristol Myers Squibb’s adjusted net income of $4.0 billion in Q1 2021 was at the same levels it was in the prior year quarter. For the full year 2020, we expect the adjusted EPS to be higher at $7.55 compared to $6.44 in 2020.
(3) Stock price estimate higher than the current market price
Going by our Bristol Myers Squibb’s Valuation, with an EPS estimate of around $7.55 and a P/E multiple of around 11x in 2021, this translates into a price of $80, which is 17% above the current market price of around $68. The 11x figure is slightly higher than the 10x levels seen as recently as late 2020, but lower than 13x levels seen in late 2018 and 2019.
Overall, the opening up of economies with a gradual rise in Covid-19 vaccination rate bodes well for pharmaceutical companies, due to increased hospital visits, and new patient starts. The company has also reported positive data from clinical trials over the recent past, including from phase three trials for Breyanzi as a second line treatment in adults with relapsed or refractory large B-cell lymphoma, and from phase two clinical trials of Reblozyl, for treatment of adults with non-transfusion dependent beta Thalassemia. This should bode well for BMY stock going forward.
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 Johnson & Johnson vs Regeneron Pharmaceuticals.See all Trefis Price Estimates and Download Trefis Data here