CFRA downgraded Bristol-Myers Squibb (NYSE:BMY) from Buy to Hold, maintaining its price target at $60, as the recent rally in the stock limited potential upside amid looming concerns over key drug revenue erosion.
The firm based its valuation on an 8.4x multiple of its 2025 EPS estimate, reflecting a discount compared to the company’s 10-year historical forward P/E average. While CFRA retained its 2024 EPS estimate at $0.94, it slightly lowered its 2025 projection from $7.18 to $7.13, highlighting challenges ahead.
Despite the recent U.S. approval of Cobenfy (KarXT) for adult schizophrenia, which CFRA views as having strong market potential, the firm argued that Bristol-Myers’ current valuation reflects the growth opportunities. The approval reinforces the company’s positioning for future growth, but headwinds remain.
Key revenue-generating drugs like Eliquis, contributing $3 billion in Q3 sales (25% of total revenue), face an impending loss of exclusivity in the coming years. Meanwhile, Revlimid, which generated $1.4 billion in Q3 sales (12% of total revenue), continues to experience sales erosion in both U.S. and international markets.
After a notable 21% rally since CFRA issued a Buy rating in July, the firm sees the current valuation as fair.