Opinions
Paul MacDonald
Bristol Myers Squibb
BMY-N
COMMENT
Feb 22, 2017
Stock price when the opinion was issued
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Was a laggard in the space, which you don't want to chase in and of itself. Often you want to buy strength, best in breed. If you look at the dip in the chart right after he bought, it shows you the danger of going down the food chain in a sector that's doing quite well.
He's holding on and would buy today.
Stock has been hot since the summer when the new CEO took over, then they got approval for their schizophrenia drugs. (Abbvie's drug failed last month.) But BMY has fallen 9% in the past 4 weeks--maybe because of concerns over the group, not the stock. Trades at only 7.9x PE 2025, and pays a 4.4% dividend which just increased last week. The stock is dirt cheap.
It's turned around in the last 6 months under the new CEO, rallying 40%. In the face of expiring drug patents, they launched a revolutionary schizophrenia drug. He also likes the rest of their pipeline to treat cardiovascular disease and oncology. He bought shares late last year.
They have huge oncology franchise, but face a huge patent cliff. But they have a some promising drugs. He owns this partly for the 5.6% dividend. He took shares off the table when the stock spiked earlier this year, but at current levels, he's watching the price go lower before buying again.
They have a pipeline of drugs, but the clear driver is going to be its immuno oncology platform. When you look through to 2020, that is going to be about 55% of its revenues. They have their combo with Opdivo Oeuvre which is coming out later this year. Don’t be naïve to the risks that are associated here. Roche is coming in 2nd line lung cancer and are capturing market share. This will trade off of the other companies. He owns all 3.