US Pharmaceuticals & Biotechnology "*INVITE & SLIDES* Conf call: BMY, JNJ - ..."

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US Pharmaceuticals & Biotechnology "*INVITE & SLIDES* Conf call: BMY, JNJ - ..."

Valuation Method and Risk Statement

Industry-specific risks include: (1) underwhelming drug product launches, (2) clinical trial

failure or discontinuation, (3) potential regulatory setback. For valuation, we use PE or EV/

sales multiple methodologies, supported by DCF frameworks.

Large Cap Biopharma: Potential downside risks to large cap biotechs are: (1) political and

geopolitical impacts to healthcare related policies (e.g. pricing, tariff, FDA organizational

changes etc.), (2) similarly, other changes in the US healthcare system, which provides a large

portion of revenues for most biopharmaceuticals companies, (3) disappointing launches or

commercial performance of marketed products, (4) FDA and EMEA regulatory decisions on

clinical candidates or approved products that are both on the market and in clinical

development, (5) potential biogeneric competition in the upcoming years for products that

have lost/will lose patent protection.

JNJ: Our 12-month $280 price target applies a ~22x P/E multiple on our Q5-Q8 EPS estimates.

Key downside risks include: 1) Lack of commercial success for new or recent drug launches; 2)

Inability to advance key pipeline products across both Pharma and MedTech. What could

make us more constructive: 1) Significant traction for current growth drivers like DARZALEX

and TREMFYA into new indications; 2) Greater near-term contributions from faster/more

successful new product launches across the portfolio; 3) Above-market MedTech growth on

improving commercial execution.

BMY: Our price target is based on a one-year forward P/E valuation, supported by DCF. Upside

risks include: (1) Higher commercial successes for IO (Opdivo/Opdulag/Yervoy), (2) Better than