New York City-based biopharmaceutical company Bristol-Myers Squibb Company (BMY) researches, develops, licenses, produces, and sells products worldwide. Its drugs are used to treat hematological, oncology, cardiology, immunology, fibrotic, neurology, and COVID-19 diseases. The company's shares have soared 12.1% in price over the past year and 17.6% over the past three months to close yesterday's trading session at $67.74.
In terms of forward Non-GAAP P/E, the stock is currently trading at 8.81x, which is 56.6% lower than the 20.31x industry average. Also, its 3.19x forward Price/Sales is 39.4% lower than the 5.26x industry average. And its 8.30x forward Price/Cash Flow is 49.6% lower than the 16.46x industry average.
Furthermore, its strong product portfolio, major clinical and regulatory milestones, and great growth potential could help it achieve long-term sustained growth.
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Here is what could shape BMY's performance in the near term:
Positive Development
This month, BMY announced that the U.S. Food and Drug Administration (FDA) had approved Opdivo (nivolumab) 360 mg (injection for intravenous use) in combination with platinum-doublet chemotherapy every three weeks for three cycles for adult patients with resectable non-small cell lung cancer (NSCLC) in the neoadjuvant setting.
And last month, BMY reported that VALOR-HCM, a Phase 3 randomized, double-blind, placebo-controlled trial to assess mavacamten in people with symptomatic obstructive hypertrophic cardiomyopathy (obstructive HCM), is eligible for septal reduction treatment (SRT) and met its primary goal at Week 16. The corporation intends to share these data with regulatory authorities.
Robust Financials
During the fourth quarter, ended Dec. 31, 2021, BMY's total revenue increased 8.3% year-over-year to $11.98 billion. Its total expenses declined 52.9% year-over-year to $10.13 billion. The company's net income came in at $2.37 billion, compared to a $10.03 billion net loss in the fourth quarter of 2020. Its EPS amounted to $1.07, compared to a $4.45 loss per share in the prior-year quarter.
Strong Profitability
BMY's 79.9% trailing-12-months gross profit margin is 41.8% higher than the 56.3% industry average. Also, its EBITDA margin and asset turnover ratio are 668.5% and 19.9% higher than the respective industry averages. Furthermore, its cash from operations stood at $16.21 billion compared to a negative $19.07 million industry average.
Impressive Growth Prospects
The Street expects BMY's revenues and EPS to rise 1.4% and 3.9%, respectively, year-over-year to $47.04 billion and $7.8 in its fiscal 2022. In addition, BMY's EPS is expected to rise at a 5% CAGR over the next five years. Also, the company has an impressive earnings surprise history; it topped the Street’s EPS estimates in each of the trailing four quarters.
Consensus Rating and Price Target Indicate Potential Upside
Among the eight Wall Street analysts that rated BMY, seven rated it Buy, and one rated it Hold. The 12-month median price target of $72.83 indicates a 7.5% potential upside. The price targets range from a low of $65.00 to a high of $76.00.
POWR Ratings Reflect Solid Prospects
BMY has an overall A grade, which equates to a Strong Buy rating in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 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 an A grade for Value and a B for Growth and Quality. The company's lower-than-industry multiples are in sync with the Value grade. In addition, BMY's solid earnings and revenue growth potential are consistent with the Quality and Growth grade.
Among the 177 stocks in the F-rated Medical – Pharmaceuticals industry, BMY is ranked #2.
Beyond what I stated above, we have graded BMY for Sentiment, Stability, and Momentum. Get all BMY ratings here.
Bottom Line
As one of the leading medical and pharmaceutical firms, BMY's current efforts in cancer medicine research and development through strategic collaborations should fuel the company's growth in the near term. Furthermore, the company's regulatory and clinical milestones should boost investors' confidence in the stock. So, we believe the stock could be a great bet now.
How Does Bristol-Myers Squibb Company (BMY) Stack Up Against its Peers?
BMY has an overall POWR Rating of A, which equates to a Strong Buy rating. Check out these other stocks within the Medical - Pharmaceuticals industry with A (Strong Buy) ratings: Novartis AG (NVS), Johnson & Johnson (JNJ), and Merck & Co. (MRK).
Click here to checkout our Healthcare Sector Report for 2022
BMY shares rose $0.67 (+0.99%) in premarket trading Wednesday. Year-to-date, BMY has gained 10.70%, versus a -10.63% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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