Last week, Bristol Myers BMY reported better-than-expected results for the fourth quarter. Adjusted earnings per share (EPS) of $1.67 beat the Zacks Consensus Estimate of $1.46. In the year-ago quarter, BMY posted an adjusted EPS of $1.70.
Total revenues of $12.3 billion surpassed the Zacks Consensus Estimate of $11.6 billion. The top line also increased 8% from the year-ago period’s level, primarily driven by the Growth portfolio and an increase in Eliquis sales.
However, the outlook for 2025 was a dampener. BMY expects revenues of approximately $45.5 billion in 2025, down from $48.3 billion reported in 2024.
Generic competition for Revlimid, Pomalyst, Sprycel and Abraxane is expected to result in a revenue decline of approximately 18-20% of the Legacy Portfolio. The guidance also reflects an approximate $500-million negative impact on revenues due to foreign exchange.
Bristol-Myers expects adjusted earnings per share to be in the range of $6.55-$6.85 in 2025.
Consequently, shares of BMY were down 7% since the earnings announcement.
Let us analyze BMY’s fundamentals in such a scenario.
Generic Competition for BMY’s Top Drugs: A Headwind
BMY generated $25.7 billion of revenues (more than 53% of total revenues) from its legacy portfolio in 2024, comprising Eliquis, Revlimid, Pomalyst, Sprycel and Abraxane.
Among these, blood thinner medicine Eliquis, for which BMY has a worldwide co-development and co-commercialization agreement with pharma giant Pfizer PFE, is the biggest contributor to the top line.
Eliquis sales in 2024 totaled $13.3 billion, up 9% year over year. BMY expects strong year-over-year growth for Eliquis in 2025. Due to the impact of the Medicare Part D redesign, sales growth for Eliquis in the United States in the first quarter will be tempered sequentially. The company expects sales for the remaining quarters of 2025 to steadily increase, particularly in the second half of the year, due to the elimination of the coverage gap.
However, generic competition for the other four drugs will reduce revenues from the Legacy portfolio by approximately 18-20%.
Newer Drugs Fuel BMY’s Top Line
Drugs like Reblozyl, Breyanzi, Camzyos and Opdualag have enabled BMY to stabilize its revenue base amid generic competition for its legacy drugs. Thalassemia drug Reblozyl, for which BMY has a collaboration agreement with Merck MRK, has put up a stellar performance since its approval, with strong growth in the United States and international markets. The drug is expected to contribute significantly in the coming decade.
Sales of its oncology drug, Opdualag, have also been robust, fueling the top line. Strong growth in the US market and encouraging uptake in newly launched markets have boosted sales.
Strong momentum in Camzyos should further drive growth.
Opdivo continues to maintain momentum as well. The FDA recently granted approval to Opdivo Qvantig (nivolumab and hyaluronidase-nvhy) injection for subcutaneous use. Per BMY, this new subcutaneous formulation of Opdivo should help extend the reach and impact of its immuno-oncology franchise to patients into the next decade.
Other drugs like Zeposia and Krazati also put up an impressive performance and should contribute to top-line growth.
BMY recently won FDA approval for xanomeline and trospium chloride (formerly KarXT), an oral medication for the treatment of schizophrenia, in adults. The drug was approved under the brand name Cobenfy.
The approval of Cobenfy for schizophrenia broadens BMY’s portfolio and validates the acquisition of Karuna Therapeutics.
Cobenfy represents the first new pharmacological approach to treating schizophrenia in decades. The initial uptake is encouraging, with sales of $10 million in 2024. This drug is expected to contribute meaningfully to BMY’s top line in the coming years as it looks to expand the drug’s label into other indications (Alzheimer's disease and bipolar 1 disorder).
Cost-Cutting Measures Should Boost BMY’s Bottom Line
In April 2024, BMY announced a strategic cost-reduction plan that should result in approximately $1.5 billion savings by the end of 2025. As of the end of the fourth quarter, BMY realized approximately $1.1 billion in savings. It expects the remaining $400 million to be realized in 2025.
Concurrent with the fourth-quarter results, BMY announced an expansion to its existing strategic productivity initiative, which will include approximately $2 billion in additional annualized cost savings by the end of 2027 (with approximately $1 billion to be achieved in 2025).
BMY’s High Debt Ratio Worrisome
While BMY’s strategy of acquiring companies with promising drugs/candidates is encouraging, it has resulted in colossal debt to finance these acquisitions.
As of Dec. 31, 2024, the company had cash and equivalents of $10.3 billion and a long-term debt of $47.6 billion.
BMY’s Stock Price, Valuation and Estimate Revision
Shares of BMY have gained 11.6% in a year against the industry’s decline of 11%.
BMY Outperforms Industry and Sector
Image Source: Zacks Investment Research
Going by the price/earnings ratio, BMY’s shares currently trade at 8.06x forward earnings, lower than its mean of 8.60x and the large-cap pharma industry’s 16.75x.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2025 earnings has moved down to $6.81 from $7.03 per share in the past seven days, while that for 2026 is down to $6.15 from $6.26.
BMY’s Estimate Movement
Image Source: Zacks Investment Research
Stay Invested in BMY Stock
Large biotech companies are generally considered safe havens for investors interested in this sector. The uptake of new drugs has been impressive for BMY and should stabilize its revenue base in the long run. Approval of additional new drugs and label expansion of top drugs should further diversify its pipeline.
However, generic competition is a major headwind for the company and the new drugs will take some time to offset this steep decline. Bristol Myers’ lackluster guidance for 2025 warrants caution. We recommend prospective investors to wait and watch for the time being.
For investors already owning the stock, staying invested would be a prudent move. The company’s attractive dividend yield (4.36%) is a strong positive for existing investors to stay invested.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Only $1 to See All Zacks' Buys and Sells
We're not kidding.
Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.
Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.
See Stocks Now >>Bristol Myers Squibb Company (BMY) : Free Stock Analysis Report
Pfizer Inc. (PFE) : Free Stock Analysis Report
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
