Here's why Bristol Myers quarter wasn't enough to change our view on the stock

Bristol Myers Squibb reported a beat-and-raise quarter, with Q3 revenue climbing 3% to $12.2 billion and adjusted EPS of $1.63, both surpassing analyst estimates. The company subsequently raised its full-year revenue guidance to $47.5-$48 billion and tightened its EPS outlook, driven by an 18% growth in its new product portfolio which offset declines in legacy drugs. Despite the positive financial results and an initial stock rally, analysts remain cautious, reducing exposure and lowering the price target to $50, as the company's long-term growth trajectory and ability to navigate upcoming patent expirations are heavily dependent on the critical Phase 3 trial data for its drug Cobenfy in Alzheimer's psychosis, with updates expected this year and in 2026.

Analysis

Bristol Myers Squibb delivered a strong third quarter, with revenue rising 3% year-over-year to $12.2 billion, exceeding the $11.8 billion consensus estimate, and adjusted EPS of $1.63, surpassing the $1.51 expectation. This performance was primarily driven by an 18% year-over-year growth in its new product portfolio, which successfully offset a 12% decline in legacy drugs. Consequently, the company raised its full-year revenue guidance to $47.5-$48 billion and tightened its EPS outlook to $6.40-$6.60.

Despite the positive financial results and raised guidance, the long-term outlook remains cautious due to the impending patent expirations for key revenue drivers such as Eliquis and Opdivo. The company's future growth hinges significantly on the success of its new schizophrenia treatment, Cobenfy, particularly its potential as a blockbuster drug for Alzheimer's psychosis. CEO Chris Boerner highlighted steady growth and positive physician feedback for Cobenfy in its approved schizophrenia indication.

The critical catalyst for the stock is the Phase 3 trial data for Cobenfy in Alzheimer's psychosis, with one update expected this year and two more in 2026, which will determine its true long-term growth potential. Reflecting this dependence and past stock underperformance, analysts reduced exposure, lowered the price target to $50 from $55, and maintained a cautious view despite the beat-and-raise quarter.

Key Decisions for Investors

• Closely monitor upcoming Phase 3 trial readouts for Cobenfy in Alzheimer's psychosis, as these represent the primary catalyst for long-term growth and patent cliff mitigation.
• Evaluate the company's ability to offset revenue declines from patent expirations on key drugs like Eliquis and Opdivo with the growth of its new product portfolio.
• Consider the current 5.5%+ dividend yield as a potential support for the stock, but acknowledge the cautious analyst sentiment and lowered price target of $50.