Where will Bristol Myers Squibb be in 5 years?

Bristol Myers Squibb (BMY 0.51%) he’s had a tough last five years. Its stock is barely in the green, its financial results have been unimpressive, and it has faced major patent cliffhangers. Most notably, its cancer drug Revlimid, its best-selling product at one time, is now off-patent exclusivity.

Despite these poor results in recent years, things could be very different for BMS in the next half-decade, but only if it can better deal with the headwinds it has experienced. Let’s find out how things might pan out for the company through 2029.

^ SPX data by YCharts.

More patent rocks on the horizon

In the second quarter, revenue rose nearly 9% year-over-year to $12.2 billion — the best growth rate BMS has seen in about three years:

BMY Income (Quarterly Yearly Growth) data by YCharts.

The drugmaker’s best-selling products during this period were the anticoagulant Eliquis and the cancer drug Opdivo; BMS shares the rights to the former drug with Pfizer. Eliquis revenue rose 7% year-over-year to $3.4 billion. Opdivo’s sales of $2.4 billion were up 11% compared to the year-ago period. These two drugs accounted for 47.6% of the company’s total revenue.

Unfortunately, both drugs will lose patent protection by the end of 2029. Once these patent cliffs arrive, revenues will drop. But BMS is already preparing for this eventuality.

Bristol Myers Squibb’s comeback plan

BMS has gained several new approvals since 2019. Let’s consider three of them. Reblozyl treats anemia in patients with beta-thalassemia; was approved in 2019. Opdualag, a melanoma therapy, launched in 2022. Camzyos, also approved in 2022, treats a heart condition. Although none of these provide a significant share of revenue, they are growing their sales rapidly:

YoY= Year over year. Data source: company financial statements.

These products and other relatively new additions to the company’s lineup should continue to grow sales over the next five years. BMS expects more than $25 billion in revenue from its new product portfolio by 2030. Nor will it stop winning new approvals or label extensions: BMS has 55 compounds in dozens of clinical trials in development.

One of the drugmaker’s promising new products isn’t exactly new: It’s a subcutaneous version of its crown jewel, Opdivo. BMS expects this version to target between 65% and 75% of Opdivo’s indications in the US. It won’t hit the same peak, but it should help smooth out the losses the company will suffer from the Opdivo patent.

In addition, BMS has many other products, some of which will join the company’s growing portfolio of new products over the next five years. The healthcare giant has also made several acquisitions to boost its pipeline in recent years.

More reasons to buy the stock

The company’s performance should improve compared to the past five years, at least until it hits major patent cliffs toward the end of the decade. And he has the tools to come back and perform well after that.

In addition, the stock is also a great choice for dividend investors: BMS has increased its payout every year for 15 consecutive years. The company is committed to continuing these increases, so expect them to maintain this streak through 2029. The forward dividend yield currently stands at an impressive 5.1%.

The cash payout rate seems conservative at just under 37%. Bristol Myers Squibb looks like a solid dividend stock to buy and hold for the next half decade, and probably well beyond.