Home » Business

Strong Fundamentals Make Bristol-Myers Squibb Stock A Real Value

Published on
  • Bristol-Myers Squibb (NYSE:BMY) posted a modest gain after a double beat on earnings.
  • The company continues to display strong fundamentals and a robust pipeline.
  • Although growth investors may not be pleased, Bristol-Myers Squibb stock remains a strong value stock.

Bristol-Myers Squibb Co (NYSE:BMY) posted a small gain after an earnings report; the company beat its top and bottom lines. The pharmaceutical company delivered earnings per share (EPS) of $1.99 on revenue of $11.22 billion. That was better than the analyst forecast for $1.83 EPS on revenue of $11.18 billion.

Get The Full Henry Singleton Series in PDF

Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q3 2022 hedge fund letters, conferences and more

 


Find A Qualified Financial Advisor

Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes.

Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.

If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now.


The results were lower when compared to the same quarter in the prior year but both were narrow losses. Earnings per share (EPS) was off by a penny and revenue was down 3%.

Growth investors may feel disappointment with the company’s results. However, Bristol-Myers Squibb has still posted strong results that establish it as an attractive value stock, even if it may not be as undervalued as it once appeared.

BMY Stock Remains a Strong Fundamental Choice

Bristol-Myers Squibb has a profit margin of over 14%, which is better than 86% of the companies in its sector. Additionally, the company’s return on assets is 6.59%, better than 91% of the industry.

The company continues to post a double-digit free cash flow (FCF) yield. Some of that FCF goes toward its dividend, which the company has increased in each of the last 12 years. These numbers take on added significance when you consider that the company expects to post single-digit growth in both revenue and earnings over the next five years.

The Pipeline Keeps Flowing

In the last year, Bristol-Myers Squibb has launched three new drugs. Each should deliver over $4 billion in non-risk adjusted sales by 2029. The company also expects to receive four more approvals by the end of 2023. The company also has a robust pipeline that includes at least 50 candidates.

What's the significance for investors?

Companies such as Bristol-Myers Squibb only enjoy patent protection for a limited time, which was on display in this earnings report. The company said that sales of Revlimid, its blockbuster cancer drug, were impacted by generic competition.

Revlimid was one of three drugs, including Eliquis and Opdivo, that combine for approximately 66% of the company’s quarterly revenue. Opdivo just received encouraging results in a clinical trial that could expand its use in treating melanoma at earlier stages.

The company did reaffirm its guidance for annual sales for Revlimid, for sales between $9 and $9.5 billion. Chief financial officer David Elkins told Reuters he expects the actual number to come in at the upper end of that range.

A Safe Port for Volatile Times

BMY stock has gone up 23% in the last five years. However, it’s clear that the bulk of that gain has come in 2022. This is probably due to investors fleeing to safety.

In that regard, Bristol-Myers Squibb delivers consistent, profitable revenue. Plus, the company delivers a dividend that pays out $2.12 on an annual basis and has a yield just under 3%.

BMY stock recently has bounced above its 10-, 20- and 50-day moving averages. However, the recent market rally has started to stir the animal spirits in the market. If that’s the case, then growth investors may start to look at risk-on assets.

That may create an opportunity for value investors who should look at every dip as an opportunity to buy shares of this still-undervalued stock.

Should you invest $1,000 in Bristol-Myers Squibb right now?

Before you consider Bristol-Myers Squibb, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Bristol-Myers Squibb wasn't on the list.

While Bristol-Myers Squibb currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

Article by Chris Markoch, MarketBeat