We came across a bullish thesis on Bristol-Myers Squibb Company (BMY) on Substack by Magnus Ofstad. In this article, we will summarize the bulls’ thesis on BMY. Bristol-Myers Squibb Company (BMY)’s share was trading at $59.01 as of March 16th. BMY’s trailing and forward P/E were 22.79 and 8.73 respectively according to Yahoo Finance.
A doctor in a lab coat examining microscope slides of immuno-oncology treatments.
Bristol-Myers Squibb (BMY) presents a compelling yet high-stakes investment opportunity as it navigates a pivotal transition in its product portfolio. The company’s current valuation reflects market skepticism regarding its ability to offset revenue declines from legacy drugs facing patent expirations. However, BMY’s growth strategy hinges on a series of promising new treatments, particularly its neuroscience drug Cobenfy, which could redefine the company’s financial trajectory if it delivers positive trial results.
Cobenfy, a schizophrenia treatment, has the potential to reach $2 billion in peak sales based solely on its current indication. However, its true potential lies in ongoing phase III trials targeting adjunctive schizophrenia and Alzheimer’s disease psychosis. If the Alzheimer’s study proves successful, Cobenfy could command nearly $10 billion in peak sales, a game-changing outcome for BMY. Given Alzheimer’s disease represents a massive market with limited effective treatments, a positive readout would lead to a fundamental revaluation of the company’s stock.
Beyond neuroscience, BMY’s broader pipeline includes Camzyos in cardiology, Reblozyl in hematology, and Iberdomide and Opdualag in oncology. Camzyos, which addresses hypertrophic cardiomyopathy, is already gaining traction with strong patient retention rates and could see sales reach between $2 billion and $4 billion by 2029. Reblozyl, a treatment for anemia patients, has rapidly grown to $1.7 billion in annual sales and is poised to expand further with additional trial results. In oncology, Iberdomide and Opdualag offer multibillion-dollar potential, though recent setbacks in Opdualag’s clinical trials have dampened expectations.
Despite these growth drivers, the key issue for BMY is whether its new drugs can compensate for declining revenues from older blockbuster treatments. The company’s financial outlook remains binary: a major breakthrough with Cobenfy would significantly enhance its valuation, while failure in its Alzheimer’s trial could leave BMY struggling to maintain revenue growth. The stock appears fairly valued based on current projections, but success in Cobenfy’s trials could add at least $15 per share, pushing the stock toward a $75 target price.
Investors must recognize the risks associated with BMY’s current position. While the company has a robust pipeline, its near-term performance is disproportionately dependent on a single study. If Cobenfy fails to demonstrate efficacy in Alzheimer’s patients, BMY’s valuation will likely decline as Wall Street reassesses its future earnings potential. However, if the trial succeeds, BMY could undergo a dramatic re-rating, making it a high-risk, high-reward opportunity.
Bristol-Myers Squibb Company (BMY) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 88 hedge fund portfolios held BMY at the end of the fourth quarter which was 70 in the previous quarter. While we acknowledge the risk and potential of BMY as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BMY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.