Holdng onto my shares and maybe adding more if it goes lower.
Bristol-Myers Can Overcome Market's Pessimism -- Barrons.com
DOW JONES & COMPANY, INC. 3:31 PM ET 8/16/2017
Symbol Last Price Change
BMY 57.51up -0.36 (-0.62%)
QUOTES AS OF 03:46:17 PM ET 08/16/2017
Despite all the takeover rumors and blockbuster drug sales, it's been a disappointing year for Bristol-Myers Squibb(BMY).
Shares of the drugmaker, down 2.5% this year, haven't recovered from the drubbing they took last year when its key cancer drug Opdivo failed in a big lung cancer study.
Late Tuesday, the woes continued when Bristol-Myers delivered mixed results from a late-stage study testing Opdivo and an older drug, Yervoy, for patients newly diagnosed with advanced or metastatic kidney cancer.
Patients treated with the drug combination responded well. But while the drug shrank tumors in some patients, survival rates without progression of the disease did not reach statistical significance. The stock dropped 1.4% to $ 57.04 in midday trading Wednesday.
The decline isn't a surprise. Drug stocks rise and fall, often sharply, on clinical trials' results. Bristol-Myers is laboring to increase Opdivo sales, which exceeded $3.7 billion last year, by widening the drug's use to more cancer patients.
Still, Wall Street remains too pessimistic about Bristol-Myers.
The drugmaker is a pioneer in the field of immunotherapy, which involves creating drugs that unleash the body's immune system to kill malignant cells and tumors. One of the company's key drugs, Opdivo, is approved as a treatment for a variety of cancers but faces rising competition from Keytruda, a rival drug from Merck & Co. (MRK). Yet Opdivo's already blockbuster sales continue to grow, and could exceed $6 billion by 2021. That's not small change for a company with annual revenue of roughly $20 billion.
In the meantime, Bristol-Myers has a robust pipeline, plus a cash-rich balance sheet, and rewards patient investors with a market-beating 2.72% dividend yield.
At 18.6 times forward earnings, Bristol-Myers has rarely traded at a price/earnings multiple this low in the past five years. The stock's cheapness has added to the takeout speculation that has swirled around the drugmaker for months.
There is downside protection for the stock thanks to activist participation, as Barron's noted in a feature story published last month.
Carl Icahn reportedly acquired a stake in the drugmaker back in February. And Jana Partners added a small stake to its portfolio late last year, after which Bristol-Myers added three new directors to its board and accelerated a share- repurchase plan.
But Bristol-Myers' fortunes rely largely on immunotherapy cancer drugs.
The market is potentially enormous and expected to reach at least $20 billion by 2021. Bristol-Myers has a number of new therapies in clinical trials. The company is also testing Opdivo in combination with old and new medications. Perhaps the most important, right now, is CheckMate 227, which tests Opdivo and Yervoy as a first-line therapy for lung cancer and could deliver data by year end.
Granted, the notion that Bristol-Myers could get snapped up by the likes of Pfizer (PFE), Novartis (NVS) or Gilead Sciences (GILD) is not a good enough reason to buy the stock. Some analysts worry that this latest clinical trial setback could signal trouble for CheckMate 227 results.
Plus, the Street's opinion leans slightly cautious toward the stock.
But with the hope for a 40% upside in the next few years, it's worth the wait.
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