Bristol-Myers Squibb Earnings: Did Opdivo & Elqiuis Sales Could Positively Impact Margins?

Bristol-Myers Squibb's stock has been on a gradual uptrend, and it is not hard to understand why. In fact, we recently upgraded our own price estimate for BMY to $65 per share. The situation has turned favorable for the company with promising new drugs in the cardiovascular, oncology and infectious diseases segments. Investors are betting on the company’s ability to substantially expand its market in the next year or two. We believe the upcoming Q2 2015 earnings results, which BMY plans to announce on July 23rd, will be largely seen from the perspective of the developments just mentioned. More specifically, the focus will be on the ramp up of sales of Eliquis and Opdivo (Nivolumab). We think that the results will be generally positive and the stock may sustain its current levels. A future trigger is likely to come from upcoming potential approvals in the area of hepatitis C and cancer treatment.

Our current price estimate for Bristol-Myers Squibb stands at $65, roughly in line with the market.

See our complete analysis for Bristol-Myers Squibb

We will be closely watching the impact of incremental sales of certain drugs on the company’s margins.

The sales of Bristol-Myers Squibb ’s cancer drugs have grown rapidly in recent quarters, particularly Yervoy and Opdivo (Nivolumab). We currently forecast the revenues from the key cancer drugs Yervoy and Opdivo to increase nearly five-fold by 2021. Most of this will be attributed to Opdivo, as we believe that it will get additional approvals. However, competition in the immuno-oncology segment will also increase as a string of approvals is likely. The recent data shared during ASCO suggests a higher survival rate for patients with non-squamous non-small-cell lung cancer (NSCLC, assuming they don’t have low amount of PD-L1). Opdivo is currently approved for squamous NSCLC, which means that with an approval for non-squamous NSCLC, the drug will expand its usage by almost threefold.

Blood thinning drug Eliquis is doing well in Europe, and even better in the U.S., Japan, the U.K., Spain and Germany. The drug could become a multi-billion dollar franchise for Bristol-Myers Squibb. The company is in a strategic partnership with Pfizer to market this drug. Eliquis has become the top anticoagulant in new-to-brand prescriptions among cardiologists in the U.S., gaining special acceptance among physicians for atrial fibrillation. The label expansion has helped as well.

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