BMY Reaffirms Raised Guidance at Citi Conference, But Debt and IRA Risks Loom

What happened

Bristol-Myers Squibb presented at the Citi Annual Global Healthcare Conference, reiterating its raised FY2025 revenue guidance to $46.5-$47.5 billion as outlined in recent filings. Management highlighted strong Q2 2025 performance, with Growth Portfolio revenue of $6.6 billion and non-GAAP EPS of $1.46, despite a $0.57 per share IPRD charge from a BioNTech partnership. They emphasized strategic initiatives like the subcutaneous Opdivo rollout and Cobenfy launch to drive growth and diversify beyond patent cliffs. However, the presentation downplayed critical financial vulnerabilities, including elevated net debt at 12.9x EBITDA and the impending IRA price negotiations for Eliquis starting in 2026. Investors should remain cautious, as execution on these fronts faces intense competition and regulatory headwinds that could undermine the optimistic outlook.

Implication

The reaffirmed guidance supports near-term revenue stability, but investors must verify that Growth Portfolio sales, such as from Opdivo and Cobenfy, meet or exceed targets to justify the BUY thesis. High leverage necessitates consistent quarterly free cash flow above $3 billion to enable debt reduction, a key risk if cash generation stalls amid operational challenges. Success of new launches is critical to offset revenue declines from LOE events like Revlimid, yet supply constraints in radiopharma and competition in I-O therapies pose execution hurdles. The IRA impact on Eliquis adds significant earnings uncertainty, with potential price cuts threatening profitability and requiring careful assessment of 2026 outcomes. Overall, while the stock appears undervalued based on DCF models, ongoing scrutiny of these factors is essential to avoid downside surprises and sustain the investment case.

Thesis delta

The conference presentation does not alter the core BUY thesis but reinforces the importance of execution against the raised guidance and strategic priorities outlined in the DeepValue report. It underscores the watch items, particularly Growth Portfolio performance and deleveraging, without introducing new catalysts that would change the investment outlook. Therefore, the rating remains contingent on successful management of risks, with no shift in fundamental assessment.