Bristol-Myers Earnings: Lowered Outlook for New Products and Margins Leads to Fair Value Cut

We are lowering our Bristol-Myers Squibb fair value estimate to $63 per share from $66 to reflect a more pessimistic outlook following third-quarter results. Management’s lowered expectations for new product launches and increased spending through 2025 caused most of the valuation decline. We believe Bristol needs to spend more on marketing to propel the lackluster sales trajectories of several new drug launches. While the outlook has deteriorated, we believe the strong efficacy of the newly launched drugs combined with increased marketing will support several new blockbusters, a key factor for the firm’s wide moat.