Bristol-Myers Squibb (BMY) needs to deliver positive results from its drug pipelines to expand its valuation, RBC Capital Markets said in a note Tuesday as it started coverage on the company.

The report said its recent re-rating to 10x from 7x forward-EPS reflecting macro factors, valuation, and H2 catalyst positioning rather than de-risking fundamentals.

BMY has most significant phase 3 path among major pharmaceutical companies, including milvexian and Cobenfy, which are perhaps overlooked, the report said.

"However, risk/reward appears balanced at these levels, in our view, and further multiple expansion requires pipeline success

to offset the $30bn LOE through 2030," the note said. LOE refers to loss of exclusivity.

RBC has a sector perform rating and a $60 price target.

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