Why This Bristol-Myers Squibb Stock Analyst Is Turning Bullish On The Pharma Company's Pipeline

Key recent clinical pipeline developments have prompted an analyst at Truist Securities to turn bullish on pharma giant Bristol-Myers Squibb Company BMY.

The Bristol-Myers Squibb Analyst: Gregg Gilbert upgraded Bristol-Myers Squibb from Hold to Buy and increased the price target from $66 to $74.

The Bristol-Myers Squibb Takeaways: Since October, when Truist initiated coverage of Bristol-Myers Squibb with a Hold rating, the company has received approvals for Abecma, a cell therapy for multiple sclerosis; Breyanzi, a cell-based gene therapy for large B-cell lymphoma; and also reported positive late-stage results for a psoriasis drug and the cancer drug relatlimab, Gilbert said in the upgrade note. 

"Our valuation construct yields a theoretical value of ~$30/share for the 150 programs, which represents the second highest value per share in the group," the analyst said. 

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The company has sounded bullish on the data from the pivotal trial for its psoriasis drug deucravacitinib and said it is confident of establishing it as a first-line oral treatment of choice for moderate to severe plaque psoriasis, he said. 

The investigational asset has been proved superior to Otezla, which is a $2.2-billion drug and is growing, Gilbert said. 

The analyst now models sales of $2 billion for deucravacitinib by 2026 given Otezla's success and the potential for deucravacitinib to be a more effective oral option.

Bristol-Myers Squibb is developing deucravacitinib for additional indications that could significantly expand its market potential, including ulcerative colitis and Crohn's disease, he said. 

The company's positive Phase 2/3 topline readout for Opdivo in combination with relatlimab, an anti-LAG-3 antibody, for the first-line treatment of melanoma represented the first Phase 3 data to be reported for a LAG-3 antibody, Gilbert said. 

Truist added relatlimab sales to its model to give the company credit for this novel immuno-oncology asset, the analyst said.

The firm expects a 2022 launch schedule, with sales reaching $500 million by 2027.

The company is testing relatlimab in numerous additional solid tumor settings, Gilbert said. 

BMY Price Action: Bristol-Myers Squibb shares were trading 0.64% higher to $63.09. 

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