JPMorgan maintained an Overweight rating and a $60.00 price target for Bristol-Myers Squibb Co. (NYSE:BMY) following the FDA's approval of the company's new schizophrenia drug, Cobenfy (KarXT). The drug, approved for use in adults, has been noted for its clean label, which notably excludes the black box warning typically associated with traditional antipsychotic therapies.
The approval of Cobenfy is seen as a positive development, especially since there were some concerns among investors about the potential for a black box warning similar to other drugs in the category. The absence of such a warning is seen as a favorable outcome exceeding most expectations.
The coverage of Cobenfy under state Medicaid plans, which account for approximately 45% of U.S. patients, is expected to be a gradual process. The analyst predicts that it will take around six months on average for state-by-state coverage to be established. By mid-2025, it is anticipated that the drug will have widespread coverage and strong uptake, as physicians have been waiting for the muscarinic class of drugs.
The report also mentions that AbbVie Inc (NYSE:ABBV). is on track to introduce a competitive drug, emraclidine, which is expected to enter the market approximately two years after Cobenfy. However, the analyst believes that the market for schizophrenia treatments is sufficiently large to accommodate multiple players.
Finally, the firm views Cobenfy as a critical asset for Bristol-Myers Squibb in addressing its late-2020s loss of exclusivity (LOE) cycle. The expected strong performance of the drug is projected to contribute to an expansion of the company's multiples, which currently trades at about 7 times JPMorgan's estimated 2025 earnings per share (EPS) for the company.
Bristol-Myers Squibb has seen significant developments in its product portfolio. The company's new medication, COBENFY, has been approved and is expected to be marketed at a list price of $1,850 for a 30-day supply. This approval signifies a major shift for the company, as it confirms the value of Bristol-Myers Squibb's $12.7 billion acquisition of Karuna. Analysts predict that COBENFY could reach peak sales of $2.4 billion for Schizophrenia and an additional $3.9 billion for Alzheimer's psychosis.
BMO Capital and Goldman Sachs have adjusted their price targets for Bristol-Myers Squibb, raising them to $53.00 and $57.00 respectively, while maintaining their ratings on the stock. Jefferies also maintained its Hold rating, citing a 4% upside potential and raising its price target to $51.00.
Bristol-Myers Squibb reported sustained reductions in brain volume loss in patients with relapsing forms of multiple sclerosis treated with Zeposia, according to the Phase 3 DAYBREAK trial. The company's blood thinner Eliquis has been selected by the Biden administration for price negotiations with the Medicare health program.
InvestingPro Insights
Recent data from InvestingPro adds context to JPMorgan's optimistic outlook on Bristol-Myers Squibb. The company's market capitalization stands at $101.61 billion, reflecting its significant presence in the pharmaceutical industry. Despite recent challenges, BMY's P/E ratio (adjusted) of 14.19 suggests a relatively attractive valuation compared to some peers.
InvestingPro Tips highlight BMY's strong dividend profile, noting that the company has maintained dividend payments for 54 consecutive years and has raised its dividend for 3 consecutive years. This consistent dividend history, coupled with a current dividend yield of 4.79%, may appeal to income-focused investors.
The approval of Cobenfy and its potential to address the company's upcoming loss of exclusivity cycle aligns with another InvestingPro Tip, which indicates that BMY's valuation implies a strong free cash flow yield. This could provide the company with financial flexibility to support the launch and marketing of new drugs like Cobenfy.
Investors seeking a more comprehensive analysis can access additional InvestingPro Tips, with 7 more tips available for Bristol-Myers Squibb on the platform.
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