Morgan Stanley Maintains Underweight Rating on Bristol Myers Squibb Despite Strong Q2 Results
Bristol Myers Squibb (BMY) reported a strong second-quarter performance, beating earnings and revenue expectations while raising its full-year guidance. The company's legacy drug Eliquis drove much of the growth, with sales expected to rise between 20% and 25%. Despite this positive report, Morgan Stanley kept its Underweight rating on BMY stock and maintained a $40 price target, significantly below the current trading level. The firm’s cautious stance is based on concerns about Bristol Myers' future earnings potential. Analysts at Morgan Stanley applied a low valuation multiple of 7 times expected future earnings—well below both historical averages for the company and industry benchmarks—to arrive at their $40 price target. This reflects skepticism that new products will offset revenue declines from expiring patents. Bristol Myers faces an estimated $30 billion in potential lost sales by 2030 due to patent expirations, which could pressure earnings if newer drugs fail to fill the gap.
Topics: Bristol Myers Squibb Eliquis Morgan Stanley stock analysis