Is There More Room For Growth In Bristol Myers Squibb Stock?

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Bristol Myers Squibb

Bristol Myers Squibb stock (NYSE: BMY), which currently trades at $75 per share, looks like it has only a little room for growth. The stock is up 21% year-to-date, significantly outperforming the broader S&P 500, which remains down by about 13% over the same period.

There are a couple of trends driving the stock higher of late. The company’s Q1 results were comfortably above the street estimates, driven by continued market share gains for its anticoagulant, Eliquis, and higher sales of cancer drug Opdivo. Also, the stock price growth is aided by an increase in dividends and boosting its share repurchase program.

Bristol Myers Squibb has today announced its plans to acquire Turning Point Therapeutics (TPTX.O) for $4.1 billion in cash. [1] This acquisition will give Bristol Myers Squibb access to a portfolio of promising cancer drugs, primarily Repotrectinib. This is an orally administered tyrosine kinase inhibitor evaluated in clinical trials for advanced non-small cell lung cancer (NSCLC) and NTRK+ advanced solid tumors. Repotrectinib, if approved by the U.S. FDA, is expected to be a blockbuster drug.

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Bristol Myers Squibb also announced that it would expand its alliance with Immatics to develop multiple allogeneic off-the-shelf TCR-T and CAR-T programs. [2] Overall, the company is focused on improving its portfolio, especially with headwinds for its top-selling drug, Revlimid. The company cut its guidance for the full-year 2022, citing sales erosion for Revlimid, which now faces biosimilar competition.

Now, the concerns around Revlimid sales erosion are genuine, and Bristol Myers Squibb may likely see some headwinds on the revenue growth side in the near term. However, there are positives as well, especially the new drugs, including Reblozyl, which looks promising with estimated peak sales north of $4 billion. While we remain bullish on BMY stock, its outperformance vis-a-vis broader markets and its peers has meant that there is not enough room left for growth. At current levels of around $75 per share, BMY stock trades at under 10x projected 2022 earnings of $7.60 on a per-share basis, which compares with an average of around 9x in the last three years. We value BMY stock at about $80 per share, which is only 7% ahead of the current market price, implying that investors may be better off waiting for a dip to enter BMY stock for better gains in the long run. See our analysis on Bristol Myers Squibb ValuationExpensive or Cheap for more details on what’s driving our valuation for the company. Also, see our analysis on Bristol Myers Squibb RevenueHow Does BMY Make Money for more details on its key revenue streams and how they have been trending.

While BMY stock looks like it has little room for growth, it is helpful to see how Bristol Myers Squibb’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for West Pharmaceutical Services vs. WillScot.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Jun 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 BMY Return -1% 20% 28%
 S&P 500 Return 1% -12% 87%
 Trefis Multi-Strategy Portfolio 3% -16% 230%

[1] Month-to-date and year-to-date as of 6/3/2022
[2] Cumulative total returns since the end of 2016

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Notes:
  1. Bristol Myers Squibb Press Release, June 3, 2022 []
  2. Bristol Myers Squibb Press Release, June 2, 2022 []