Bristol Posts Q3 Ahead of Our Expectations as New Drugs Launch With Mixed Success

Bristol Myers Squibb reported third-quarter results slightly ahead of our expectations, partly driven by stronger-than-expected sales from blood cancer drug Revlimid. However, given heavy generic pressure expected for the drug in the near term, we don’t expect any changes to our fair value estimate. With the stock price trading close to our fair value estimate, the market appears to reflect our view that while Bristol holds a very strong lineup of new drugs, the massive approaching patent losses will restrain growth over the next decade. Nevertheless, Bristol’s strong ability to replace sales due to patent losses reinforces the firm’s wide moat rating.