Barclays Raises Target On Merck, Lowers Target On Bristol-Myers

While immuno-oncology [I-O] would eventually be a combination therapy market, this could take a long time, Barclays’ Geoff Meacham said in a report. He added that neither Bristol-Myers Squibb Co (NYSE: BMY) nor Merck & Co., Inc. (NYSE: MRK) deserved full credit “until the clinical data is more de-risked.”

Bristol-Myers

Analyst Meacham maintained an Equal-Weight rating on Bristol-Myers, while reducing the price target from $75 to $65. Consensus estimates for the company reflect the lost near-term 1L NSCLC revenue following the CheckMate-026 miss. However, there is potential downside to the consensus estimates for US Opdivo, translating to downside for the 2017-2018E expectations.

Meacham forecasted Opdivo sales for 2016 and 2017 at $3.4 billion and nearly $4.7 billion, representing growth of 7 percent and 8 percent, respectively. The 2018 sales are estimated at $6.2 billion, representing 15 percent growth, assuming a positive CM-227 trial results in a 1L launch in 2H18. The EPS estimate for 2017 has been reduced from $3.10 to $2.88.

Merck

The analyst maintained an Overweight rating on Merck, while raising the price target from $66 to $72. There is upside to the consensus expectations for Keytruda sales in 2016-2018. The estimates have been raised by merely $55-$145 million following the positive KEYNOTE-024 top line results.

“We think the Street is likely not giving enough credit as our KOL checks indicate usage won't be limited to NSCLC patients with PD-L1 high expressers but potentially to a broader swath which is positive for the biomarker,” Meacham wrote. The EPS estimate for 2016 has been raised from $3.74 to $3.76.

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