Bristol Myers Squibb (BMY)

A really good company, but if you look at the oncology franchise, this is by far and away more weighted towards oncology drugs than any other Pharma player, almost disproportionately so. The efficacy of the medication is wonderful, which is a real plus. At this lower valuation, it is probably one of the attractive takeover candidates. It could go higher, but first it will go lower.

Things that concern him about the drug segment is that under the Trump regime, a lot of drug companies have sold off, and those that haven’t have a product suite that allows them to maintain at high levels. This company has an immunotherapy drug that works on melanoma, and the big upside is if the drug can work on lung cancer. We are only talking phase 2 trials, and the stock is trading on that noise. They still have to get through phase 3 and phase 4. There are 4 companies in that category that have those kinds of drugs. If the drug works out, there will be huge upside, but if not, the stock will fall out of bed. He feels there is too much risk. If you have made some money, take some off the table.

A company with a very deep pipeline of drugs, one of the major ones being the cancer drug Opdivo, specifically in the immuno oncology area, which the market has written off for now. Merck (MRK-N) has clearly beaten them to the punch on lung cancer with Keytruda, but there is still a vast market, awaiting on the Opdivo end, and he thinks the market is not giving it its due value. Also, this is a potential take out candidate for something like Johnson & Johnson (JNJ-N) or Pfizer (PFE-N). Dividend yield of 3.16%. (Analysts’ price target is $59.12.)

He is a little more cautious on healthcare names because of the new US governments stance. Prefers AbbVie (ABBV-N) which has a little better valuation and growth profile. Bristol-Myers has a cancer drug that has a lot of competition from a number of other companies. Technically, it is well below its 200-day moving average.

You have not been able to buy this stock at its model price since 2012. It has come back to that price. He is positive on this stock. $60.16 is the model price. We will see how drugs work in 2017.

The pharma group went out of favour 3-4 months ago. That became a source of funds for people to rotate into other industries. We are now heading into year-end, with a market where buying is broadening out into more and more sectors. The healthcare sector seems to be catching a little bit of a bid, it is improving. He would describe the sector as being “neutral, to a little better”. Within the sector, this company has had some disappointment recently. He would prefer something like a Merck (MRK-N), which sets up better, and has a broad-based portfolio of products.

This is doing well, but they had a cancer drug, Optiva which ran into some regulatory issues in the summer, causing the stock to fall. The company faces pipeline issues like everybody else. Shares are trading at 20X earnings. There are probably a couple of other places that have better value with more upside.

He bought this when it had no pipeline, which is when he likes to buy drug stocks. Sold it a number of months ago, and then it had a big drop off. Their initial drop off was because they had a large bet on a cancer drug that didn’t quite get the results that they hold for. It is now back on his radar as a potential if it continues to sell off.

This has gone from $70 down to $50 because of a trial they missed on their Optivo lung cancer drug. The drug will be used for other things, and will probably be used as a combination with another type of therapy on lung cancer, so he thinks you buy the Dip. They have great growth prospects out to 2020. Dividend yield of about 3%.

He owns MRK-N because it was cheaper at the time he added it. These are companies that are global in scope and will do really well over time. They will benefit from people moving away from the device companies.

It has a great dividend and does not trade at a high multiple. The issue is that this sector is the easiest sector to criticize going into the election. You will do well with it over the next year when you know who is in power. This is the time to buy these kinds of companies.

(Market Call Minute.) A great example of why stop losses are important. It had a big haircut about 1.5 months ago. He got stopped out.

You really can’t go wrong here. The stock is all the way down to $50 a share, and will certainly come back. They have some phase 3 trials with some breakthrough blockbuster kind of drugs. Dividend yield of 3%.

The whole sector has pulled back. Growth is slowing in large cap pharma. It has an attractive yield. She went with a more diversified approach (JNJ-N). This is an attractive entry point for BMY-N.

One of his larger pharma weightings. This is a high quality stock, and is more attractively valued than it was 6 weeks ago, even 6 days ago. Pays an attractive dividend of over 3%. Well capitalized, but has had some challenges with its cancer drug Opdivo. However, that corner of their products is only about 5% of the demand for this class of drugs over time. About a 3^rd of a stocks’ value is the markets’ bet on the future product flow, and the best way to understand that is to dig in and look at the patents. Doing this, you are paying about half as much for the future product flow when buying this company versus the typical drug stocks.