Opinions
Brooke Thackray
Bristol Myers Squibb
BMY-N
WATCH
May 23, 2018
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.
The healthcare sector tends to be known as a defensive sector, because of the stability of earnings. The issue this year was that President Trump threatened to come after the pharma sector for medication costs. Seasonally the sector tends to do best from August into October. He would wait on this for a short term test of support $47 and this could be the level to get into. (Analysts’ price target is $59 )