BMY Down 7% Post Q4 Earnings: Should You Buy, Sell or Hold the Stock?

Core Viewpoint - Bristol Myers (BMY) reported better-than-expected fourth-quarter results, but the outlook for 2025 indicates a revenue decline due to generic competition and foreign exchange impacts [1][2][3]. Financial Performance - Adjusted earnings per share (EPS) for Q4 were $1.67, exceeding the Zacks Consensus Estimate of $1.46, but down from $1.70 in the same quarter last year [1]. - Total revenues reached $12.3 billion, surpassing the Zacks Consensus Estimate of $11.6 billion, marking an 8% increase from the previous year [1]. 2025 Outlook - BMY anticipates revenues of approximately $45.5 billion in 2025, a decrease from $48.3 billion in 2024 [2]. - The company expects a revenue decline of about 18-20% from its Legacy Portfolio due to generic competition [2]. - Adjusted EPS guidance for 2025 is projected to be between $6.55 and $6.85 [2]. Drug Portfolio and Competition - BMY's Legacy Portfolio generated $25.7 billion in revenues in 2024, accounting for over 53% of total revenues, with Eliquis being the largest contributor [4]. - Eliquis sales in 2024 were $13.3 billion, reflecting a 9% year-over-year growth, with expectations for continued growth in 2025 despite initial sales growth being tempered [5]. - Generic competition is expected to significantly impact revenues from Revlimid, Pomalyst, Sprycel, and Abraxane [6]. New Drug Contributions - Newer drugs like Reblozyl, Breyanzi, Camzyos, and Opdualag are helping to stabilize BMY's revenue amid generic competition [7]. - Reblozyl has shown strong performance and is expected to contribute significantly in the coming decade [7]. - Opdualag and Camzyos are also experiencing robust sales growth, contributing positively to the top line [8]. Cost-Cutting Initiatives - BMY announced a strategic cost-reduction plan aimed at achieving approximately $1.5 billion in savings by the end of 2025, with $1.1 billion already realized [12]. - An expansion of the strategic productivity initiative is expected to yield an additional $2 billion in annualized cost savings by the end of 2027 [13]. Debt and Valuation - As of December 31, 2024, BMY had cash and equivalents of $10.3 billion and long-term debt of $47.6 billion, raising concerns about its high debt ratio [14]. - BMY shares currently trade at a price/earnings ratio of 8.06x forward earnings, lower than its historical mean and the large-cap pharma industry average [18]. Estimate Revisions - The Zacks Consensus Estimate for 2025 earnings has decreased from $7.03 to $6.81 per share over the past week, with a similar downward trend for 2026 [19].