BMY: Eliquis Sales Loss Quantified, Dividend Under Threat

What happened

Bristol Myers Squibb faces a new headwind as a 24/7 Wall Street article reports its blockbuster blood thinner Eliquis is expected to lose $1.5-2 billion in sales by 2027. This loss, likely driven by IRA price cuts and generic competition, compounds the debt burden that remains elevated at $40.9 billion. The previous DeepValue report had rated BMY a WAIT, citing near-term policy fragilities and a gross margin range of 69-70% for 2026. The new information suggests the 2027 outlook is more challenged, with the dividend (currently yielding over 4%) coming under scrutiny. Investors should watch for management's guidance on 2027 and whether cash flow can cover the $5 billion in annual dividends while servicing debt.

Implication

Based on the new information, we are lowering our confidence in the base-case scenario and increasing the probability of the bear case. The bear case previously assumed $52 intrinsic value primarily from Revlimid erosion, but adding Eliquis sales loss of $1.5-2B could push value below that level. However, the company has significant liquidity and cost-cutting programs that could offset some of the cash flow decline. The dividend is currently well covered by free cash flow (2025 FCF was about $15.7B), but as Eliquis declines, the payout ratio will rise, possibly forcing a dividend cut or freeze. We recommend investors reassess their position with a focus on management's 2027 guidance and any signs of margin deterioration; the stock is not yet attractive at current levels.

Thesis delta

The thesis shifts from a cautious WAIT to a more defensive stance as the Eliquis sales loss is now quantified at $1.5-2B for 2027. This increases the risk to the dividend and pushes our bear-case probability higher. We maintain a WAIT rating but would look to trim positions on any strength toward $70.