Bristol-Myers Squibb Company (BMY) discovers, develops, licenses, manufactures, and markets biopharmaceutical products worldwide. The company provides products for diseases, including hematology, oncology, immunology, cardiovascular, neuroscience, and Covid-19.
The company’s strong third-quarter results reflect solid growth in its existing and new product portfolios. It continues to progress its pipeline and achieve significant regulatory and clinical milestones.
The company’s financial strength allows it to reward shareholders through dividends increasingly. BMY has raised its dividend payments for six consecutive years. Its board of directors declared a quarterly dividend of $0.54 per share on the company's $0.10 par value common stock, payable on November 1, 2022.
In addition, the board declared a quarterly dividend of $0.50 per share on the company’s $2.00 convertible preferred stock, payable on December 1, 2022. The company pays a $2.16 per share dividend annually, which translates to a 2.7% yield on the current price. Its four-year dividend yield is 3.03%.
Moreover, BMY’s dividend payouts grew at a CAGR of 9.6% over the past three years and 6.7% over the past five years.
Shares of BMY have gained 28.9% year-to-date and 34.2% over the past year to close the last trading session at $79.78.
Here is what could influence BMY’s performance in the upcoming months:
Recent Developments
On September 17, BMY received approval from European Commission for LAG-3-Blocking Antibody Combination, Opdualag (nivolumab and relatlimab), for the treatment of unresectable or metastatic melanoma with tumor cell PD-L1 Expression < 1%. This approval would enable treating all adults and adolescents above 12 years of age in all EU member states and Iceland, Liechtenstein, and Norway.
On September 15, BMY announced adjuvant treatment with Opdivo (nivolumab) demonstrated a statistically significant and clinically meaningful improvement in recurrence-free survival (rfs) in patients with Stage IIB/C Melanoma in the CheckMate -76K Trial.
Furthermore, in August, BMY completed its acquisition of Turning Point Therapeutics, Inc., in an all-cash transaction. Elizabeth Mily, BMY’s Executive Vice President, Strategy & Business Development, said, “Turning Point has distinguished itself in the field of precision oncology, and this acquisition will further strengthen our leading oncology franchise.”
Solid Financials
In the fiscal 2022 third quarter ended September 30, 2022, BMY’s total in-line products and new product portfolio revenue increased 8% year-over-year to $8.62 billion. Its earnings before income taxes grew 2.4% year-over-year to $2.21 billion. The company reported net earnings attributable to BMY of $1.60 billion, up 6.7% year-over-year.
Furthermore, the company’s non-GAAP net earnings per share attributable to BMY rose 3.1% from the year-ago value to $1.99.
Favorable Analyst Estimates
Analysts expect BMY’s EPS for the fiscal 2023 first quarter (ending March 2023) to come in at $2.02, indicating an increase of 3.1% from the prior-year period. The consensus revenue estimate of $11.66 billion for the same quarter indicates a marginal year-over-year increase. Moreover, the company has an impressive earnings surprise history, as it topped the consensus EPS estimates in each of the trailing four quarters.
In addition, the company’s EPS for the fiscal year 2023 (ending December 2023) is expected to rise 4.4% from the previous year to $7.95. Analysts expect the company’s revenue for the next year to grow 2.7% year-over-year to $47.20 billion.
Discounted Valuation
In terms of forward non-GAAP P/E, BMY is currently trading at 10.51x, 42.7% lower than the industry average of 18.35x. The stock’s forward EV/EBITDA of 10.13x is 22.2% lower than the industry average of 13.02x. Moreover, its forward EV/EBIT multiple of 10.92 compares with an industry average of 16.39.
Furthermore, in terms of forward Price/Sales, BMY is currently trading at 3.86x, 6.7% lower than the industry average of 4.14x. Its forward Price/Cash Flow multiple of 10.51 is 37.8% lower than the industry average of 16.88.
High Profitability
BMY’s trailing-12-month gross profit margin of 79.42% is 45.8% higher than the 54.49% industry average. Its trailing-12-month EBITDA margin of 44.35% is 1,345.5% higher than the 3.07% industry average. Also, the stock’s trailing-12-month net income margin of 14.29% compares to the industry average of negative 3.68%.
Moreover, BMY’s trailing-12-month levered FCF margin of 29.89% compares to the industry average of negative 2.44%. Likewise, its trailing-12-month ROCE, ROTC, and ROTA of 19.11%, 8.22%, and 6.80% compare to the industry averages of negative 39.56%, 21.85%, and 30.48%, respectively.
POWR Ratings Show Promise
BMY has an overall A rating, equating to a Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. BMY has a grade of A for Value, consistent with its lower-than-industry valuation multiples. Also, it has a B grade for Quality, in sync with its higher-than-industry profitability metrics.
In addition, the stock has a grade B for Stability, consistent with its beta of 0.27.
BMY is ranked #5 out of 164 stocks in the Medical-Pharmaceuticals industry.
Beyond what I have stated above, we have also given BMY grades for Sentiment, Growth, and Momentum. Get access to all BMY ratings here.
Bottom Line
Biopharmaceutical company BMY’s revenue and net income have grown at 24.6% and 5.7% CAGRs over the past three years. Given its financial strength and diverse product portfolio, the company is well-positioned for growth. Also, the stock is currently trading above its 50-day and 200-day moving averages of $72.10 and $72.84, respectively, indicating an uptrend.
Given BMY’s robust financials, improved profitability, reliable dividend payments, low valuation, and promising growth prospects, we think it could be wise to invest in this stock now.
How Does Bristol-Myers Squibb Company (BMY) Stack up Against Its Peers?
BMY has an overall POWR Rating of A. One could also check out these other stocks within the Medical-Pharmaceuticals industry with an A (Strong Buy) rating: Novo Nordisk A/S ADR (NVO), and Neurocrine Biosciences, Inc. (NBIX).
BMY shares were unchanged in premarket trading Thursday. Year-to-date, BMY has gained 31.93%, versus a -20.32% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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