Bristol-Myers Squibb Analyst Sees Multiple Expansion Story, Limited Near-Term Downside Risk

An analyst at Guggenheim Securities turned bullish on pharma giant Bristol-Myers Squibb Co (NYSE: BMY) Monday, basing their optimism on a revival in sales of its flagship immuno-oncology drug Opdivo.

The Bristol-Myers Squibb Analyst:  Analyst Seamus Fernandez upgraded Bristol-Myers Squibb shares from Neutral to Buy with a new $70 price target. 

The Bristol-Myers Squibb Thesis: Opdivo is stabilizing, with positive best-in-class data across several first-line and early stage cancers, Fernandez said in the upgrade note. 

Peak Opdivo sales will likely be more than $11 billion in 2025 through the U.S. patent expiration in 2028, the analyst said. 

This estimate is based on a revised model that includes early stage cancers and the incremental impact of first-line metastatic successes, along with physician checks suggesting solid early uptake of Opdivo + Yervoy in PDL1 low and negative lung cancer, he said. 

The consensus Opdivo sales are achievable, with upside optionality in 2022 and beyond, Fernandez said. 

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"BMY is a multiple expansion story with limited near-term downside risk, in our view," the analyst said. 

Guggenheim sees several drivers of multiple expansion, including Opdivo's return to growth as a key driver of the base business, execution on new product launches and incremental 2021/22 potential pipeline catalysts not factored into the sell-side firm's model, he said. 

New product launches include Zeposia in multiple sclerosis and ulcerative colitis, Reblozyl in myelodysplastic syndromes and anemia and Onureg, Fernandez said.

Among the unaccounted pipeline catalysts are Factor Xia and Opdivo + Yervoy combination in stage 3 unresectable non-small cell lung cancer, the analyst said. 

Guggenheim is particularly favorable on the near-term risk-reward for the stock.

BMY Price Action: At last check, Bristol-Myers Squibb shares were down 1.11% at $60.57. 

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