Bristol Myers Squibb Reverses Its Losing Spree On First-Quarter Beat, But Risks Linger

Bristol Myers Squibb (BMY) has staged a dramatic turnaround in its financial health, reporting a net profit of $2.5 billion in Q1 2025 compared to a $11.9 billion loss in the same period last year. The biopharma giant’s first-quarter results reflect a strategic pivot toward its “Growth Portfolio,” which drove an 18% increase in revenue (excluding forex impacts) to $5.6 billion. Yet, despite outperforming expectations, BMY’s stock dipped 2% in the week following the earnings release—a stark contrast to broader market optimism. This mixed reception underscores the complex balancing act the company faces as it navigates legacy drug declines, pipeline setbacks, and regulatory uncertainties.

Financial Turnaround Amid Portfolio Shifts

BMY’s Q1 2025 results highlight a stark divergence between its Growth and Legacy portfolios. While the Growth segment surged, older drugs like Revlimid and Pomalyst saw steep declines due to generic competition and Medicare pricing pressures. Total revenue fell 6% year-over-year to $11.2 billion, but this still beat analyst estimates by $500 million. Key drivers of growth included:
- Opdivo: Sales rose 9% to $2.27 billion, bolstered by new FDA approvals for first-line hepatocellular carcinoma and colorectal cancer treatments.
- Camzyos: Expanded use in hypertrophic cardiomyopathy contributed to an 89% sales jump.
- Cobenfy: Despite a failed Phase 3 trial for schizophrenia, early U.S. adoption generated $27 million in revenue.

Conversely, the Legacy Portfolio, which includes Eliquis and Revlimid, declined 20% to $5.6 billion. Eliquis, a critical anticoagulant, saw sales dip 4% to $3.57 billion as generic competition looms after 2028. Revlimid’s sales plummeted 44% to $936 million, reflecting its loss of exclusivity.

BMY’s cost discipline also shone: SG&A expenses fell 33% to $1.6 billion, and R&D spending dropped 5% (non-GAAP) to $2.2 billion, as the company targets $2 billion in annual savings by 2027. These cuts, alongside reduced amortization charges, enabled non-GAAP EPS to surge to $1.80, far exceeding the $1.49 estimate.

Stock Underperformance: A Cautionary Note

Despite the strong results, BMY’s shares fell 2% in the week following the earnings release, while the broader market rose 2.3%. This divergence reflects investor skepticism about lingering risks:

1. Pipeline Setbacks: Cobenfy’s failed Phase 3 trial for schizophrenia—a major unmet need—has dimmed its blockbuster potential. Analysts have slashed sales forecasts, raising doubts about BMY’s ability to offset losses from Eliquis and Revlimid.
2. Regulatory and Tariff Uncertainties: BMY’s guidance excludes potential impacts of U.S. pharmaceutical tariffs proposed by the Trump administration, which could squeeze margins. Meanwhile, Medicare price negotiations under the Inflation Reduction Act will begin in 2026, further pressuring legacy drug revenues.
3. Valuation Gap: BMY trades at $49.82, a 16.2% discount to its $59.47 consensus analyst target. This gap hints at investor demand for clearer evidence that BMY’s growth portfolio can sustain profitability.

Analysts forecast a 4% annual revenue decline over the next three years, citing legacy erosion and execution risks in its “China 2030 Strategy,” aimed at expanding oncology treatments in the world’s second-largest pharmaceutical market.

Pipeline Progress and Remaining Challenges

BMY’s pipeline offers hope but comes with caveats:
- Opdivo/Yervoy Combinations: FDA approvals in hepatocellular carcinoma and positive CHMP recommendations for non-small cell lung cancer reinforce its oncology leadership.
- Sotyktu: Strong Phase 3 data in psoriatic arthritis could expand its dermatology franchise.
- Cobenfy: While its schizophrenia trial failed, BMY is banking on its early adoption for bipolar disorder and Alzheimer’s agitation.

However, the company’s reliance on late-stage trials and regulatory approvals leaves it vulnerable. A recent setback in Camzyos’s ODYSSEY-HCM trial—missing its primary endpoint for non-obstructive hypertrophic cardiomyopathy—adds to the uncertainty.

Conclusion: A Work in Progress

BMY’s Q1 results mark a critical step toward profitability, but its path to sustained growth remains fraught with obstacles. The stock’s 16% discount to analyst targets suggests investors are waiting for proof that its Growth Portfolio can compensate for legacy declines. Key catalysts include:
- Cobenfy’s Resurrection: Success in bipolar disorder trials or label expansions could salvage its commercial potential.
- Cost Savings Execution: Achieving $2 billion in annual savings by 2027 will be critical to offsetting margin pressures.
- Regulatory Navigation: Navigating Medicare price cuts and tariffs without sacrificing margins will test management’s agility.

For now, BMY’s story is one of cautious optimism. While the company has reversed its losing streak, investors will require more than quarter-to-quarter improvements—they’ll need a clear path to long-term resilience in an increasingly competitive and regulated healthcare landscape.

The stakes are high. With a 16% valuation discount and a 2028 earnings target of $10.1 billion, BMY must prove its growth story is more than a temporary fix—it must be a foundation for the future.