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Is BMY Stock A Buy After A Second-Quarter Beat As Revlimid Rivals Loom?

Bristol Myers Squibb (BMY) won a priority review for its drug, Orencia, in graft vs. host disease prevention, but BMY stock was under pressure in early September.




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The Food and Drug Administration is due to consider Orencia to prevent the immune condition in stem cell transplant patients no later than Dec. 23. Also last month, the FDA approved Bristol cancer drug, Opdivo, in patients with high-risk bladder cancer. Meanwhile, European officials approved its Bluebird Bio (BLUE)-partnered Abecma in patients with multiple myeloma.

Bristol also reported strong second-quarter metrics in late July. Edward Jones analyst Ashtyn Evans said Bristol Myers is benefiting from recovering economies and patients returning to doctors’ offices. Opdivo sales returned to growth, while cancer med Yervoy led the way in terms of growth.

But the company decided to pull its drug, Istodax, from the U.S. market after a post-approval study didn’t confirm the drug’s benefit in patients with a type of lymphoma. Bristol also pulled its approval for Opdivo as a second option for some liver cancer patients after additional testing didn’t confirm the drug’s benefit.

So, is now the right time to buy BMY stock?

Bristol Myers Expands Its Drugs Wheelhouse

After buying Celgene, the pharmaceutical company’s biggest products are Opdivo, another cancer drug called Revlimid, and a blood thinner dubbed Eliquis.

In the second quarter, Opdivo sales climbed 16% to $1.91 billion. Revenue from Revlimid hiked 11% to $3.2 billion. Eliquis generated $2.79 billion in sales, soaring 29%. The best growth in the quarter came from Yervoy. Sales popped 38% to $510 million.

Total revenue jumped 16% year over year to $11.7 billion. Adjusted earnings were $1.93 per share, up 18%. Both measures easily beat BMY stock analysts’ forecast.

After acquiring Celgene, Bristol Myers had several quarters of particularly bullish sales and profit growth. But now that Celgene is fully digested, the impact is more muted on financials, taking BMY stock out of CAN SLIM rules for investing. Investors are advised to seek companies with recent quarterly sales and earnings growth of 20%-25%.

For the third quarter, analysts polled by FactSet expect Bristol Myers earnings to rise 19% to $1.94 a share. They predict $11.61 billion in sales, up about 10%.

What Do Annual Metrics Say About BMY Stock?

BMY stock ended 2020 with a 3.4% decline. As of midday trading on Sept. 1, BMY stock was up 5.7%.

Last year, sales soared 63% to $42.52 billion, benefiting from a year of Celgene drug sales.

For 2021, analysts call for Bristol Myers to earn $7.49 per share, up more than 16%, on $46.45 billion in sales, which would climb 9.1%. In the future, however, analysts are watching for generic versions of cancer drug Revlimid. Teva Pharmaceutical (TEVA) is set to launch a generic in 2022.

BMY Stock Technical Analysis: Shares Break Out

BMY first topped a buy point at 68.06 out of a flat base on July 14, according to MarketSmith.com. The stock has bounded into and out of its buy zone since. In midday trading on Sept. 1, BMY stock was below its 5% chase zone. Shares hit a floor at their 50-day line, but remained above their 200-day moving average.

BMY stock has a Composite Rating of 81 and a Relative Strength Rating of 46, according to IBD Digital.

The CR measures a stock’s key technical and fundamental metrics. That CR puts BMY stock in the top 19% of all stocks. The RS Rating tracks the stock’s 12-month performance vs. all other stocks on a 1-99 scale. Market-leading stocks have an RS Rating of 80 or higher.

BMY stock ranks sixth among the 33 pharmaceutical companies in the Medical-Ethical Drugs industry group based on CR. The group itself ranks No. 28 out of 197 industry groups tracked by Investor’s Business Daily.

Recent News From The Company

As part of the Celgene buyout, Bristol Myers promised to pay $9 per Contingent Value Right owned by former Celgene shareholders. However, the FDA failed to approve cancer drug liso-cel by a year-end 2020 deadline. That killed the payout for Celgene shareholders.

But Bristol Myers remains sunny on other opportunities.

Recently, Bristol Myers and partner Acceleron Pharma (XLRN) said adding their drug, Reblozyl, to standard drugs improved anemia in 77% of patients with beta thalassemia. The patients weren’t dependent on regular blood transfusions.

On June 2, the European Commission approved a combination of Opdivo and Yervoy for patients with a form of lung cancer. The FDA also approved Opdivo for some esophageal or gastroesophageal patients and Zeposia for moderately to severely active ulcerative colitis.

Bristol also unveiled promising test results for Opdivo plus Yervoy in patients with lung cancer and melanoma, and for Abecma in multiple myeloma.

Bristol Myers also bought MyoKardia for $13.1 billion in 2020. Now, the company is planning to ask for FDA approval of its heart drug mavacamten in obstructive hypertrophic cardiomyopathy, a chronic and potentially fatal heart disease.

So, Is BMY Stock A Buy Right Now?

No, BMY stock isn’t a buy right now.

Shares are below their entry. It’s best to add shares after a stock has surpassed a buy point and is within the 5% chase zone. Investors are advised to sell when a stock falls 7%-8% below its entry.

Further, sales and earnings growth wasn’t bullish enough to meet CAN SLIM advice in the second quarter, and only earnings growth is expected to meet that bar in the third quarter. That’s not enough to label BMY stock a CAN SLIM stock.

To find the best stocks to buy or watch, check out IBD Stock Lists and other IBD content. Make sure to also keep tabs on stocks to buy or sell.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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