A Ramp Up In Opdivo And Eliquis Sales Will Drive Bristol-Myers Squibb’s Future Growth

The production line of Bristol Myers Squibb’s pharmaceutical plant of French group UPSA (Union de pharmacologie scientifique appliquee) in Agen, southwestern France, on March 29, 2018.   (Photo credit Georges Gobet/AFP/Getty Images)

Bristol-Myers Squibb (NYSE:BMY)recently posted its Q2 results, which topped the Street estimates. The company’s overall revenues grew 14%, led by continued ramp up in Opdivo and Eliquis sales. Both of these drugs are on a strong run, and this trend will likely continue in the foreseeable future. In fact, Bristol-Myers Squibb’s future growth can primarily be linked to these two drugs. The contribution of these drugs to the company’s overall revenues is close to 60%, which is significant. We have created an interactive dashboard ~ A Quick Snapshot of Bristol-Myers Squibb’s Q2 Performance And Trefis Estimates For 2018 ~ on the company’s expected performance in 2018. You can adjust the revenue and margin drivers to see the impact on the company’s revenues, earnings, and price estimate.

Oncology And Cardiovascular Will Likely Continue To See Strong Growth

The Oncology segment will continue to perform well with revenues estimated to grow in mid-teens for the full year. Opdivo is the leader in the immuno-oncology space, and will likely continue to see strong growth. The drug has been approved for a number of indications, and now it is also approved with combination of Yervoy for three types of tumors. This should bode well for the future sales of the drug. Note that Opdivo has seen stellar sales growth from less than $1 billion in 2015 to close to $5 billion in 2017, and we forecast it to grow north of $7.5 billion by the end of our forecast period. The peak sales for Opdivo are estimated to be as high as $12 billion.

Bristol-Myers Squibb’s Cardiovascular segment, which consists of Eliquis, has seen a solid growth of close to 40% in the first half of 2018, and this trend will likely continue in the near term. This can be attributed to higher demand, given the drug’s increased acceptance and market share gains. In fact, the company’s management in the recent earnings conference call stated that Eliquis will soon overtake Warfarin as the leader in the new oral anticoagulants market in the U.S. Accordingly, we estimate Eliquis sales to grow 25% to around $6 billion in 2018.

Among other segments, we forecast a mid-single digit growth in Immunology revenues, primarily led by Orencia, which saw a low double digit growth in sales in the first half of 2018. For other segments – Virology and Mature Products – we forecast a double digit decline in revenues, as most the drugs have lost patent exclusivity, and now face biosimilar and generic competition.

Overall, Bristol-Myers Squibb’s Q2 earnings were better than the street estimates, with continued growth in two key drugs, which we believe will continue to see strong growth in the near term. Despite an earnings beat, the stock price was down slightly in the trading session, due to worries of a possible negative opinion of a European advisory group on the Opdivo and Yervoy combination. We expect the company to post earnings of $3.42 in 2018. We forecast a TTM price to earnings multiple of around 18.5x, to arrive at our price estimate of $62 for Bristol-Myers Squibb. This implies a premium of roughly 10% to the current market price.

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