What’s Driving Growth For Bristol Myers Squibb Stock?

BMY: Bristol Myers Squibb logo
Bristol Myers Squibb

Bristol Myers Squibb stock (NYSE: BMY) has seen an 18% rise this year, far better than the broader S&P500 index, which is down 20%. Looking at the longer term, BMY stock is up 42% from levels seen in late 2018, slightly underperforming the S&P 500 index, up about 55%.

This 42% growth for BMY stock since late 2018 can primarily be attributed to 1. Bristol Myers Squibb’s revenue growth of 107% to $46.7 billion over the last twelve months, compared to $22.6 billion in 2018, partly offset by 2. a 28% rise in its average total shares outstanding to 2.1 billion and 3. the company’s P/S ratio falling 12% to 3.4x trailing revenues vs. 3.8x in 2018. Our dashboard on Why Bristol Myers Squibb Stock Moved has more details.

The strong 2x growth for BMS’ revenue was primarily driven by the Celgene acquisition in 2019, which gave it access to some blockbuster oncology drugs, including Revlimid. Continued market share gains for Eliquis and Opdivo have also bolstered the company’s top-line growth. However, Revlimid’s loss of market exclusivity poses a threat to sales growth in the future. Revlimid sales were down 19% to $7.7 billion for the nine months ending Sep 2022. The company does have new drugs, such as Reblozyl, which are seeing market share gains and are expected to offset some of the loss from biosimilar competition for Revlimid. This trend is likely to continue in the near term.

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BMS is looking at inorganic growth to expand its pipeline. A couple of months back, it announced plans to acquire Turning Point Therapeutics (TPTX.O) for $4.1 billion in cash. This acquisition will give Bristol Myers Squibb access to a portfolio of promising cancer drugs, primarily Repotrectinib. This is an orally administered tyrosine kinase inhibitor evaluated in clinical trials for advanced non-small cell lung cancer (NSCLC) and NTRK+ advanced solid tumors. Repotrectinib, if approved by the U.S. FDA, is expected to be a blockbuster drug. Also, it would expand its alliance with Immatics to develop multiple allogeneic off-the-shelf TCR-T and CAR-T programs.

We estimate  Bristol Myers Squibb’s valuation to be $80 per share, reflecting only an 8% upside from its current market price of $74, implying that BMY stock has little room for growth. Our valuation is based on a forward P/E ratio of a little over 10x based on our earnings forecast of $7.96 on a per-share basis for the full-year 2023. At its current levels, BMY stock is trading at a little over 9x its forward earnings, aligning with its last three-year average. We don’t expect any meaningful change in the P/E multiple, given that the company faces biosimilar competition for Revlimid.

While BMY stock looks fairly valued, it is helpful to see how Bristol Myers Squibb’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, the Covid-19 crisis 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 Mednax vs. Penske Automotive.

Despite inflation rising and the Fed raising interest rates, BMY stock has risen 18% this year. But can it drop from here? See how low Bristol Myers Squibb stock can go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Dec 2022
MTD [1]
YTD [1]
Total [2]
 BMY Return -8% 18% 26%
 S&P 500 Return -6% -20% 71%
 Trefis Multi-Strategy Portfolio -6% -23% 212%

[1] Month-to-date and year-to-date as of 12/23/2022
[2] Cumulative total returns since the end of 2016

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