On Friday, an analyst from Goldman Sachs reaffirmed a Buy rating with a price target of $57.00 for Bristol-Myers Squibb Co. (NYSE:BMY). The endorsement followed the FDA approval of Bristol's schizophrenia treatment, Cobenfy (KarXT), which occurred on September 26th. The analyst highlighted the significance of the drug not receiving a black box warning, emphasizing Cobenfy's favorable safety and tolerability profile.
The newly approved medication is priced at approximately $1,850 per month, which equates to around $22,500 annually. According to the analyst, this pricing is justified given the drug's premium profile. Bristol-Myers Squibb has set expectations for a commercial launch in 2025, taking into account the over 80% Medicare/Medicaid patient exposure and the expected gradual process of securing formulary access, particularly with state Medicaid programs.
The approval of Cobenfy represents a major milestone for Bristol-Myers Squibb, marking the drug as a significant growth driver and affirming the company's acquisition strategy, particularly its purchase of Karuna. Looking ahead, the analyst mentioned that forthcoming data from a registrational study of ABBV's emraclidine in the fourth quarter of 2024 could serve as the next catalyst in the schizophrenia treatment market.
The study's outcomes are anticipated to be neutral or potentially beneficial, as they may increase the visibility and share of muscarinic agents, which are expected to play a transformative role in the treatment of schizophrenia.
Furthermore, Goldman Sachs has scheduled a Key Opinion Leader (KOL) call to take place on Friday at 11 am ET. The discussion will focus on Cobenfy's commercial prospects and the potential for other emerging neuropsychiatric treatments currently under development.
In other recent news, Bristol-Myers Squibb has been making significant strides in the pharmaceutical sector. The company reported sustained reductions in brain volume loss in patients with relapsing forms of multiple sclerosis treated with Zeposia, according to data from the Phase 3 DAYBREAK trial.
Additionally, Bristol-Myers is awaiting a decision from the FDA regarding KarXT, a treatment developed by the company. The market is closely watching for the outcome, which could impact the company's position in the antipsychotic drug market.
Analyst firms have also been active. Goldman Sachs maintained its Buy rating on Bristol-Myers, while Jefferies kept its Hold rating, citing a 4% upside potential and raising its price target to $51.00. These assessments followed encouraging updates on the company's oncology portfolio and a positive outlook on the company's factor XIa inhibitor, milvexian.
Further, Zenas BioPharma, backed by Bristol-Myers Squibb among other investors, initiated the process for a U.S. initial public offering. The FDA is also reviewing Bristol-Myers Squibb's Opdivo in combination with Yervoy for the treatment of unresectable hepatocellular carcinoma. Moreover, the company's blood thinner Eliquis has been selected by the Biden administration for price negotiations with the Medicare health program.
InvestingPro Insights
Following the FDA approval of Bristol-Myers Squibb's schizophrenia treatment, Cobenfy, and the positive outlook from Goldman Sachs, it's valuable to consider the financial health and market sentiment around the company. Bristol-Myers Squibb's aggressive share buyback strategy, as noted by InvestingPro Tips, signals management's confidence in the company's value. Additionally, the company's commitment to raising its dividend for three consecutive years, coupled with a history of maintaining dividend payments for 54 years, showcases its dedication to shareholder returns.
From a valuation standpoint, Bristol-Myers Squibb's P/E Ratio, adjusted for the last twelve months as of Q2 2024, stands at 14.19, indicating a potentially attractive valuation for investors. The company's strong free cash flow yield, as implied by its valuation, is an important metric for investors seeking companies with the financial flexibility to sustain and grow their business. Furthermore, the recent price total return over the last three months of 22.58% reflects a robust short-term performance in the market.
Investors looking to delve deeper into Bristol-Myers Squibb's financials and market potential can find additional InvestingPro Tips, which provide a comprehensive analysis of the company's performance and outlook.
For those interested in exploring more about Bristol-Myers Squibb's financial health and market potential, additional InvestingPro Tips are available at: https://www.investing.com/pro/BMY
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