Bristol Myers Squibb (BMY) just gave investors a strong quarter and a bigger outlook.
Morgan Stanley read the same report and kept its rating exactly where it was. (The source of much of this article is a Morgan Stanley report shared with me.)
Morgan Stanley sees the stock falling to $40, well below the $65.31 it closed at on July 31.
That decision says something useful about how Wall Street values a drugmaker that is doing well today but faces a harder 2027 and 2028.
For anyone holding the stock or watching it after a strong run, the reason behind that caution deserves a closer look.
What Bristol Myers reported in the second quarter
The company delivered what Wall Street calls a beat and raise.
A beat and raise means a company tops expectations for the quarter and then lifts its forecast for the rest of the year.
Bristol Myers posted second-quarter adjusted earnings of $2.04 a share on revenue of $12.97 billion, topping analyst estimates of $1.60 and about $11.86 billion, according to Quiver Quant.
Management raised full-year 2026 revenue forecast to between $49.0 billion and $50.0 billion.
It also lifted adjusted earnings forecast to a range of $6.75 to $7.00 a share.
The company raised operating expense guidance to about $16.5 billion to fund pipeline work and product launches.
Shares climbed on the news, outperforming the S&P 500 on the day the results landed.
Why an older drug did most of the heavy lifting
The gains came mostly from Eliquis, the blood thinner Bristol Myers sells with Pfizer.
Eliquis sits in what the company calls its legacy portfolio, which refers to its older, established medicines rather than its newer growth drugs.
Bristol Myers now expects worldwide Eliquis sales to grow 20% to 25% this year, up from a prior forecast of 10% to 15%, according to Reuters.
That upgrade drove roughly half of the total guidance increase.
Here is where the tension is: the quarter’s…
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