Friday morning before market open, Bristol-Myers Squibb Co (NYSE:BMY) came to terms with the failure of its Phase III CheckMate-026 trial evaluating Opdivo monotherapy in PD-L1 positive, treatment-naïve non-small cell lung cancer (NSCLC) patients. The trial did not meet the crucial primary endpoint of progression free survival.

Though William Blair analyst John Sonnier acknowledges the biotech misstep is of course not only a setback, but a “big disappointment,” the analyst maintains bullishness and rates Buy for Bristol.

Sonnier is taken aback with surprise by Bristol’s negative results, especially when recalling more promising activity indicated in prior Optivo therapy trials. The phase III flop does not spell good news for Opdivo’s short-term. Before, it had been outpacing competitor Merck’s pipeline cancer drug Keytruda. After Phase II, Opdiva’s primary endpoint came in significantly lower than its rival drug, whose results at a 50% cut-off point were deemed successful.

However, Sonnier asserts, “…we reiterate our view that Bristol is positioned to maintain its leadership position in immuno-oncology with formative data coming from additional front-line lung cancer trials described above as well as with a broad array of additional cancer immunotherapy combination trials reporting out over the coming 12-24 months.” The analyst takes the phase III results into account, issuing downward revisions of 15% to EPS CAGR with a 2017 estimate of $2.93 per share after the surprising front-line failure. Yet, Sonnier clings to hope for the drug maker, even as shares have tumbled nearly 16% in the aftermath.

As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, five-star rated analyst John Sonnier is ranked #298 out of 4,101 analysts. Sonnier upholds a high success rate of 61% and realizes 15.1% in his annual returns. Additionally, Sonnier earns 17.2% in profits when recommending BMY.

TipRanks analytics demonstrate Bristol Myers is a Buy. Based on 11 analysts polled in the last 3 months, 7 rate a Buy while 6 maintain a hold. The 12-month average price target is $77.10, marking a nearly 22% upside from where the shares last closed.

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