Morgan Stanley Targets New All-Time High For Bristol-Myers, Upgrades To Overweight

Bristol-Myers Squibb Co BMY stock is up 26.5 percent year-over-year, making a partial recovery from a mid-2016 plunge, and one analyst anticipates upside worthy of a new all-time high.

The Rating

Morgan Stanley analyst David Risinger upgraded Bristol-Myers from Equal-Weight to Overweight and raised the price target from $63 to $78.

The Thesis

The firm’s immuno-oncology franchise lends strategic optionality, particularly in the form of mergers or acquisitions, and two of its drugs are seen to have significant market potential.

“We have greater confidence that Bristol's Opdivo + Yervoy combination regimen can play a meaningful role in first-line lung cancer, which is the largest cancer market,” Risinger said in a Thursday note. (See the analyst's track record here.)

Bristol-Myers recently released positive Phase 3 data on the Opdivo-Yervoy combination therapy demonstrating superior progression-free survival over chemotherapy. Risinger raised combined 2023 sales estimates from $11 billion to $13 billion on the news.

The analyst said he anticipates a market advantage driven by predictions of high overall survival in high tumor mutational burden patients; acceptable toxicity based on comparable levels in alternatives; patient preference over chemotherapy; and physician preference for biomarkers.

Considering this opportunity, the analyst forecasts five-year compound annual growth of 8 percent for revenue and 15 percent for earnings per share, coupled with operating margin expansion from 26 percent to 35 percent.

Price Action

Bristol-Myers Squibb shares were up 4.1 percent at $68.01 after the open Thursday.

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