Bristol-Myers Could Be Vulnerable To Takover After Pullback, Says Goldman

Goldman Sachs analyst Jami Rubin think the surprising failure of Bristol-Myers' (BMY) CheckMate-026 trial reinforces that combination therapy is necessary in lung cancer. He also thinks that the significant pullback in its shares following the news could make the company vulnerable to a takeover.

Rubin lowered his Opdivo sales estimate in 2020 to $7.4B from $10B and increased his 2020 estimate for Merck's (MRK) Keytruda to $5.8B from $4.4B.

He keeps a Buy rating on Bristol-Myers, but lowered his price target on the stock to $75 from $90. He raised his price target on Merck to $65 from $60, but keeps a Neutral rating on its shares.

From this morning:

Shares of Merck (MRK) are jumping in pre-market trading after competitor Bristol-Myers Squibb (BMY) announced that CheckMate -026, a trial investigating the use of Opdivo as monotherapy, did not meet its primary endpoint of progression-free survival in certain patients with previously untreated advanced non-small cell lung cancer. Merck markets Keytruda, an anti-PD-1 therapy for patients with locally advanced or metastatic non-small cell lung cancer in patients whose tumors express PD-L1 and who have received at least one prior chemotherapy regimen. Bristol-Myers shares remain halted in pre-market trading, while Merck shares are up 12.6% to $64.75 following the news.