We are maintaining our Neutral recommendation on Bristol-Myers Squibb Company (BMY) with a target price of $33.00.
Bristol-Myers is a major producer and distributor of pharmaceuticals and other healthcare related products. The company, which was formerly known as Bristol-Myers Company, changed its name to Bristol-Myers Squibb Company in 1989. The company, founded in 1887, is headquartered in New York.
Bristol-Myers manufactures and sells branded pharmaceutical drugs such as Baraclude, for hepatitis B virus (HBV), Plavix for hypertension, Sustiva for HIVand Erbitux for cancer.
In late 2009, Bristol-Myers sold its interest (83.1% stake) in infant formula maker Mead Johnson. The divestiture enabled Bristol-Myers to operate as a fully independent biopharmaceutical company, focusing exclusively on its Pharmaceuticals segment.
Bristol-Myers is looking to make up for the loss of revenues, that is feared due to the impending genericization of its key drugs, through partnering deals, acquisitions and the introduction of new products. Bristol-Myers, which lost patent protection on products worth about $4 billion over the past few years, would be worst hit by the impending genericization ofits blockbuster drug Plavix (blood-thinner). Bristol-Myers has co-developed Plavix with Sanofi-Aventis (SNY).
Bristol-Myers has met with a great deal of success in this respect this year. Many new products have been launched/approved so far this year. Moreover, Bristol-Myers boasts of a robust and diversified pipeline. The successful development of the pipeline will further boost the top line. However, any pipeline setback would weigh heavily on the stock.
We believe that the stock is fairly valued at current levels. We see limited upside potential until the new products realize their full potential and compensate for the loss of revenues.
BRISTOL-MYERS (BMY): Free Stock Analysis Report
SANOFI-AVENTIS (SNY): Free Stock Analysis Report
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