Should You Buy, Hold, or Sell BMY Stock Ahead of Q2 Earnings?

Bristol-Myers Squibb (BMY) is poised to report Q2 2025 earnings on July 31, with consensus estimates of $11.38 billion in sales and $1.18 EPS, though 2025/2026 EPS forecasts have seen recent downward revisions. The biotech giant faces ongoing revenue headwinds from generic competition impacting its legacy drug portfolio, which comprised half of Q1 sales. However, growth from its newer product pipeline and aggressive cost-cutting initiatives targeting $3.5 billion in annual savings by 2027 are expected to partially mitigate these pressures, as BMY's stock has underperformed year-to-date, down 14.4%.

Analysis

Bristol-Myers Squibb (BMY) is approaching its Q2 2025 earnings report facing a critical transition period, characterized by significant headwinds for its legacy drug portfolio and promising momentum in its growth assets. The primary challenge stems from generic competition impacting drugs like Revlimid and Sprycel, which constituted half of total sales in the first quarter, alongside tempered U.S. sales growth for its blockbuster Eliquis due to Medicare Part D redesign. This pressure is reflected in recent downward revisions to full-year 2025 and 2026 EPS estimates. To counteract these declines, the company relies on its growth portfolio, including Opdivo, Reblozyl, and Camzyos, and the successful launch of new drugs like Cobenfy. Operationally, BMY is pursuing an aggressive cost-reduction strategy aiming for $1.5 billion in savings by 2025 and an additional $2 billion annually by 2027 to bolster profitability. Despite a strong history of earnings beats, the model's negative Earnings ESP of -7.92% signals potential for a miss against the consensus estimate of $1.18 EPS on $11.38 billion in sales. The stock's significant underperformance, down 14.4% year-to-date, has resulted in a valuation of 7.84x forward earnings, which is below both its historical average and the industry multiple, suggesting the market has priced in substantial uncertainty.

Key Decisions for Investors

• Given the stock's low valuation and attractive dividend yield, current investors may consider holding their positions, anticipating that the growth portfolio and aggressive cost-cutting measures will eventually offset legacy product erosion.
• Prospective investors should exercise caution and monitor the upcoming Q2 results for tangible evidence that growth from new products like Reblozyl and Opdualag is accelerating sufficiently to fill the revenue gap left by declining legacy drugs.
• Investors should scrutinize management's commentary on the execution of its $3.5 billion cost-savings plan and the impact of acquisition-related debt, as these are critical factors for future margin expansion and balance sheet health.