Global biopharmaceutical company Bristol-Myers Squibb Company (BMY) recently received the European Commission’s approval regarding the fixed-dose combination of Opdualag (nivolumab and relatlimab) for the first-line treatment of advanced (unresectable or metastatic) melanoma in adults and adolescents. Opdualag is expected to be a game-changer in the European oncology field.
Moreover, 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.”
BMY’s forward non-GAAP P/E of 9.59x is 47.5% lower than the industry average of 18.25x. Its forward EV/EBITDA of 8.83x is 30.7% lower than the industry average of 12.73x. Its forward Price/Sales of 3.33x is 24.1% lower than the industry average of 4.40x, while its forward Price/Cash Flow of 9.76x is 37.8% lower than the industry average of 15.68x.
BMY has gained marginally over the past month to close the last trading session at $72.13. It has gained 15.6% year-to-date and 20.4% over the past year.
Here is what could shape BMY’s performance in the near term:
Solid Financials
BMY’s total revenues increased marginally year-over-year to $11.89 billion for the second quarter that ended June 30, 2022. Its non-GAAP net earnings came in at $4.15 billion, up 13.2% from the prior-year period, while its non-GAAP EPS came in at $1.93, up 18.4% year-over-year.
Favorable Analyst Expectations
Analysts expect BMY’s revenue to increase 3.5% year-over-year to $47.69 billion in 2023. Moreover, its EPS is expected to increase 6.7% year-over-year to $8.01 in 2023. Also, its EPS is expected to increase by 4.7% per annum for the next five years.
Of the 10 Wall Street analysts that have rated BMY, six rated it Buy, three rated it Hold, and only one rated it Sell. Wall Street analysts expect the stock to hit $79.33 in the near term, indicating a potential upside of 10.1%.
Robust Profitability Margins
BMY’s trailing-12-month gross profit margin of 79.76% is 46.8% higher than the industry average of 54.31%. Its trailing-12-month EBITDA margin of 44.83% is 905% higher than the industry average of 4.46%, while its trailing-12-month net income margin of 14.04% is higher than the negative industrial average of 2.40%.
Furthermore, its trailing-12-month ROCE, ROTC, and ROTA of 19.07%, 8.32%, and 6.59% are significantly higher than the negative industry averages of 38.42%, 21.27%, and 29.54%, respectively.
POWR Ratings Reflect Promising Outlook
BMY has an overall A rating, which equates to Strong Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has an A grade for Value, in sync with its lower-than-industry valuation multiples. The stock has a B grade for Growth and Quality, consistent with its solid financial growth in the latest reported quarter and higher-than-industry profitability margins, respectively.
In the 164-stock Medical – Pharmaceuticals industry BMY is ranked #4.
Click here for the additional POWR Ratings for BMY (Momentum, Stability, and Sentiment).
View all the top stocks in the Medical – Pharmaceuticals industry here.
Bottom Line
BMY reported robust financials in its latest reported quarter. Also, its revenue has increased at an 18.4% CAGR over the past five years. Given the stock’s solid profitability, I think this undervalued gem might be an ideal long-run addition to your portfolio.
How Does Bristol-Myers Squibb Company (BMY) Stack Up Against its Peers?
While BMY has an overall POWR Rating of A, one might consider looking at its industry peers, Johnson & Johnson (JNJ), Merck & Co., Inc. (MRK), and Novartis AG (NVS), which also have an overall A (Strong Buy) rating.
BMY shares were trading at $71.30 per share on Thursday afternoon, down $0.76 (-1.05%). Year-to-date, BMY has gained 17.01%, versus a -23.13% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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