Biopharmaceutical company Bristol-Myers Squibb Company’s (BMY) shares have gained 21.4% over the past year to close yesterday’s trading session at $64.07. It is currently trading 4.6% below its 52-week high of $67.16, which it hit on January 19, 2021. The company’s impressive revenue growth over the past year was driven primarily by its Celgene acquisition, which it completed in November 2019. Furthermore, having delivered dividend growth over the past 14 years, BMY is a solid dividend play.
The company has consistently paid dividends each quarter for the past 31 years. Its dividend has grown at a CAGR of 4.6% over the past five years and at a CAGR of nearly 6% over the past three years. While the four-year average dividend yield for BMY is 3%, its current dividend translates to a 3.1% yield. Its board of directors has declared a quarterly dividend of $0.49 per share on its common stock, which is payable on May 3, 2021. Its board also declared a quarterly dividend of $0.50 per share on its $2.00 convertible preferred stock, payable on June 1, 2021.
Here are the factors that we think could influence BMY’s performance in the coming months:
Impressive Revenue and Earnings Growth
BMY’s revenue has increased at a CAGR of 20.8% over the past five years and at a CAGR of 27% over the past three years thanks to its profitable acquisitions over the past few years and its continuous product development. The company’s ebitda and total assets also increased at CAGRs of 58.5% and 52.3%, respectively, over the past three years.
Numerous Product Approvals Around the World
On March 26, the U.S. Food and Drug Administration (FDA) approved the use of Abecma, which was developed by BMY and bluebird bio, Inc. (BLUE). It is a personalized immune cell therapy used for the treatment of adult patients with relapsed or refractory multiple myeloma after four or more prior lines of therapy.
Japan’s Ministry of Health, Labour and Welfare (MHLW) approved BMY’s Breyanzi on March 25. It is a CD19-directed chimeric antigen receptor T cell therapy for the treatment of patients with relapsed or refractory large B-cell lymphoma and follicular lymphoma. Also, in February, the European Commission (EC) granted full Marketing Authorization to BMY’s Inrebic, which is used for the treatment of disease-related splenomegaly, among others.
In terms of its forward non-GAAP price/earnings ratio, BMY’s 8.54x is 65.1% lower than the industry average 24.43x. In terms of forward price/sales ratio, the stock’s 3.09x is also 57.3% lower than the industry average 7.22x. Also, the stock’s forward enterprise value/sales of 3.84x is lower than the industry average 6.68x.
Favorable Analyst Sentiment
BMY has an average broker rating of 1.45. Also, of 19 Wall Street analysts that have rated the stock, 14 rated it a Strong Buy or Buy. The stock is expected to hit $75.13 in the near term, which indicates a potential upside of 17.3%.
POWR Ratings Show Promise
BMY has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings assesses stocks by 118 different factors, each with its own weighting.
Our proprietary rating system also evaluates each stock based on eight different categories. BMY has an A grade for Value, consistent with its lower-than-industry valuation ratios.
It has a B grade for Sentiment, which is in sync with favorable analyst sentiment. Analysts expect its revenue and EPS to increase 12.8% and 16%, respectively, for the quarter ending June 30. This led to the stock’s B grade for Growth also.
In addition to the POWR Ratings grades we’ve just highlighted, one can see BMY’s ratings for Momentum, Stability and Quality here.
BMY is ranked #15 of 237 stocks in the Medical – Pharmaceuticals industry.
There are 30 other top-rated stocks in the same industry. Click here to see them.
As COVID-19 vaccinations continue to gain ground, more people are expected to visit doctors’ offices and hospitals for reasons other than COVID-19. Consequently, the demand for BMY’s products and services is expected to increase. Its numerous collaborations with companies such as Pfizer, Inc. (PFE) and Otsuka Pharmaceutical Co. are also expected to help continue its momentum. With these factors in mind, along with its dividend payment history, we think it wise to scoop up BMY now because it is trading at a discount to its peers.
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BMY shares were trading at $63.35 per share on Tuesday morning, down $0.72 (-1.12%). Year-to-date, BMY has gained 2.13%, versus a 5.83% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...
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