Bristol Myers Stock Gains 9.2% in a Month: Should You Buy Now or Wait?

Shares of Bristol Myers BMY have risen 9.2% in the past month compared with the medical biomedical and genetics industry’s growth of 5%.  The stock has also outperformed the industry and the sector during this timeframe.Last month, BMY reported better-than-expected results for the fourth quarter. 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.Bristol Myers Stock Outperforms Industry, Sector & S&P 500Image Source: Zacks Investment ResearchGeneric competition for Revlimid, Pomalyst, Sprycel and Abraxane is expected to result in a revenue decline of approximately 18-20% for the Legacy Portfolio. The guidance also reflects an approximate $500-million negative impact on revenues due to foreign exchange.Consequently, shares declined on the same but regained thereafter.Let us analyze BMY’s fundamentals in such a scenario.Newer Drugs Fuel BMY’s Top LineBMY’s Growth Portfolio, comprising drugs like Reblozyl, Breyanzi, Camzyos and Opdualag, has stabilized BMY’s 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 U.S. market and encouraging uptake in newly launched markets have boosted sales.Strong momentum in Camzyos should further drive growth.Opdivo continues to maintain momentum on consistent label expansions. The FDA approval of Opdivo Qvantig (nivolumab and hyaluronidase-nvhy) injection for subcutaneous use should help extend the impact of its immuno-oncology franchise to patients into the next decade.The European Commission recently approved Opdivo plus Yervoy (ipilimumab) for the first-line treatment of adult patients with unresectable or advanced hepatocellular carcinoma.Other drugs like Zeposia and Krazati should also 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 the company looks to expand the drug’s label into other indications (Alzheimer's disease and bipolar 1 disorder).Generic Competition for BMY’s Top Drugs: A HeadwindWhile the newer drugs boost sales, generic competition for legacy drugs, which account for the lion’s share of total revenues, is worrisome for the company. 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. Due to the impact of the Medicare Part D redesign, sales growth for Eliquis in the United States in the first quarter might be tempered. The company expects Eliquis 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%.Cost-Cutting Measures Should Boost BMY’s Bottom LineWhile revenue growth should be challenging, BMY is looking to boost its bottom line. In April 2024, BMY announced a strategic cost-reduction plan that might 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 WorrisomeWhile 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 Stock Valuation and Estimate RevisionGoing by the price/earnings ratio, BMY’s shares currently trade at 9.23x forward earnings, higher than its mean of 8.59x but lower than the large-cap pharma industry’s 17.51x.Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for 2025 earnings has moved down to $6.75 from $6.98 per share in the past 30 days. The metric for 2026 has moved south to $6.07 from $6.21.Image Source: Zacks Investment ResearchStay Invested in BMY StockLarge biotech companies are generally considered safe havens for investors interested in this sector.While BMY’s efforts to revive the top line in the face of generic challenges for key drugs are commendable, we recommend investors to wait and watch for now, as the outlook for 2025 does not look bright. For investors already owning the stock, staying invested would be a prudent move. The company’s attractive dividend yield is a strong positive for investors.BMY currently carries a Zacks Rank #3 (Hold).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bristol Myers Squibb Company (BMY): Free Stock Analysis Report Pfizer Inc. (PFE): Free Stock Analysis Report Merck & Co., Inc. (MRK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks