Leading pharma company Bristol-Myers Squibb Company’s (BMY) revenue beat analyst estimates by 0.3%, while its EPS came 8.5% above the consensus estimate.
Despite the macroeconomic headwinds, the company maintained its prior guidance for the current fiscal year, 2022. Its total sales are expected to be $46 billion, and non-GAAP EPS is expected to come between $7.44 and $7.74 in the current fiscal year.
In August, the company announced that it had completed its acquisition of Turning Point in an all-cash transaction. Through the transaction, the company gained repotrectinib, a next-generation tyrosine kinase inhibitor targeting the ROS1 and NTRK oncogenic drivers of non-small cell lung cancer (NSCLC) and other advanced solid tumors.
BMY’s stock has gained 49.7% over the past year to close the last trading session at $80.28. The stock has gained 28.8% year-to-date. It is trading higher than its 50-day and 200-day moving averages of $74.18 and $73.67, respectively, indicating an uptrend
Here’s what could influence BMY’s performance in the upcoming months:
Recent Developments
On November 29, BMY and Envisagenics, an AI-driven biotechnology company that delivers therapies for RNA splicing diseases, announced a research collaboration agreement to leverage Envisagenics' SpliceCore® AI platform. This is expected to expand BMY’s vast oncology pipeline.
On November 10, 2022, Health Canada approved BMY’s CAMZYOS (mavacamten capsules) for treating adults with Symptomatic Obstructive Hypertrophic Cardiomyopathy. This should help the company provide a new treatment option to patients and thus expand its revenue stream.
Robust Financials
In the third quarter that ended September 30, 2022, BMY’s total in-line products’ worldwide revenue increased 5.2% from its prior-year value to $8.07 billion, while its total new product portfolio’s worldwide revenue rose 60.8% year-over-year to $553 million.
The company’s non-GAAP earnings before income taxes increased marginally year-over-year to $5.13 billion. Its non-GAAP EPS attributable to BMY increased 3.1% year-over-year to $1.99.
Stable Dividend
BMY paid a quarterly dividend of $0.54 per share on November 1, 2022. Its annual dividend of $2.16 per share translates to a 2.69% yield on the current share price. Its four-year dividend yield is 3.03%. The company’s dividend payouts have grown at a CAGR of 9.6% over the past three years and 6.7% over the past five years.
The drug-making company has 33 consecutive years of dividend payment history and has raised dividends for six consecutive years.
Favorable Analyst Estimates
Analysts expect BMY’s EPS for the second fiscal quarter ending June 2023 to increase 7.4% year-over-year to $2.07. Its revenue for the same quarter is likely to grow marginally from its prior-year quarter.
Similarly, its EPS for the next fiscal year ending December 2023 is expected to rise 4.3% year-over-year to $7.94, while its revenue is expected to increase 2.7% year-over-year to $47.11 billion.
Moreover, the company has surpassed its consensus EPS estimates in each of the trailing four quarters, which is quite impressive.
Discounted Valuation
In terms of forward non-GAAP P/E, BMY is trading at 10.54x, which is 47.6% lower than the 20.12x industry average. Its forward Price/Cash flow multiple of 10.46x is 42.6% lower than the 18.22x industry average.
Also, the stock’s 10.84x forward EV/EBIT is 37.2% lower than the industry average of 17.26x, while its forward EV/EBITDA multiple of 10.12x is 23.5% lower than the industry average of 13.23x.
High Profitability
BMY’s trailing-12-month EBITDA margin of 44.35% is considerably higher than the industry average of 3.73%. Its trailing-12-month gross profit margin of 79.42% is 44.4% higher than the industry average of 54.99%.
Additionally, BMY’s trailing-12-month ROCE, ROTC, and ROTA of 19.11%, 8.22%, and 6.80% compare to the respective industry averages of negative 39.86%, 22.05%, and 31.42%.
POWR Ratings Show Promise
BMY has an overall rating of A, which equates to a Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by taking into account 118 different 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, in sync with its discounted valuation.
It has a B grade for Quality, consistent with its high profitability. Its B grade for Stability is in sync with its 24-monthly beta of 0.22.
In addition, the stock has a B grade for Sentiment as per its favorable analyst sentiment.
BMY is ranked #4 out of 160 stocks in the Medical – Pharmaceuticals industry.
To access additional BMY ratings for Growth and Momentum, click here.
View all the top stocks in the Medical – Pharmaceuticals industry here.
Bottom Line
Amid macroeconomic turmoil, BMY’s earnings beat underscores its resilience. Moreover, the company’s revenue and net income have grown at 24.6% and 5.7% CAGRs over the past three years. With the stock trading above its moving averages, it might be a solid buy now.
How Does Bristol-Myers Squibb Company (BMY) Stack up Against Its Peers?
BMY has an overall POWR Rating of A, equating to a Strong Buy rating. Check out these other stocks within the Medical – Pharmaceuticals industry with an A (Strong Buy) rating: Novo Nordisk A/S (NVO), Pfizer Inc. (PFE), and Astellas Pharma Inc. ADR (ALPMY).
BMY shares were trading at $81.09 per share on Thursday afternoon, up $0.81 (+1.01%). Year-to-date, BMY has gained 34.10%, versus a -13.30% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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