2. Bristol-Myers Squibb Co (NYSE:BMY)
Number of Hedge Fund Investors: 57
A caller recently asked Jim Cramer about his thoughts on Bristol-Myers Squibb Co (NYSE:BMY), referring to Bristol-Myers Squibb Co’s (NYSE:BMY) almost 6% dividend yield. Cramer said that if you want to get “paid to wait,” Pfizer is a better choice because with Bristol-Myers Squibb Co (NYSE:BMY) “it’s going to be a long wait.”
Bristol-Myers Squibb Co (NYSE:BMY) shares have lost about 36% over the past one year. The stock is getting clobbered amid fears of sales declines following patent expirations. Bristol-Myers Squibb Co’s (NYSE:BMY) cancer drug Revlimid has seen severe sales declines after it went off-patent in 2022. Bristol-Myers Squibb Co’s (NYSE:BMY) anti-stroke drug Eliquis is going off-patent in 2026. To offset the potential declines, Bristol-Myers Squibb Co (NYSE:BMY) is going on a buying spree, acquiring smaller companies to expand its portfolio. Bristol-Myers Squibb Co (NYSE:BMY) bought Karuna Therapeutics (neuroscience drugs), RayzeBio, Inc.( adiopharmaceutical therapeutics) and Mirati Therapeutics (oncology drugs).
Earlier this month, Bristol-Myers Squibb Co (NYSE:BMY) jumped after the company said the FDA-authorized cancer therapy Krazati (adagrasib) reached its main goal in a late-stage trial for lung cancer.
Some analysts believe Bristol-Myers Squibb Co (NYSE:BMY) could use AI for drug discovery to expand its portfolio. According to data from McKinsey, generative AI could produce $60 billion to $110 billion annually in value for the pharmaceutical industry. However, our research shows there are many pure-play AI stocks currently trading at attractive valuations. If you are looking for an AI stock that is as promising as Microsoft but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Based on its 2025 EPS estimate of 6.91, the stock is trading at a forward P/E of just 6, much lower than the industry median of 19. Its P/S ratio stands at 1.85, compared to the industry average of 3.61. However, over the next five years unless Bristol-Myers Squibb Co (NYSE:BMY) could expand its portfolio rapidly and do something about its patents, the company is expected to report a negative growth rate of -4.45%. That’s why Cramer said it’d take a long time before this investment could pay off.
Ariel Global Fund stated the following regarding Bristol-Myers Squibb Company (NYSE:BMY) in its fourth quarter 2023 investor letter:
“Biopharmaceutical company, Bristol-Myers Squibb Company (NYSE:BMY), also underperformed in the quarter on mixed earnings results and a reduction in guidance due to a delay across several new product launches. Although the company’s mid- to long-term targets remain intact, management expects a transition period before the company returns to top-tier growth. In our view, many of the new drugs represent either the first-in-class (the first molecule approved by the FDA) or best efficacy opportunities and believe the new product portfolio should outperform expectations over time. Meanwhile, management remains bullish on its maturing pipeline and reaffirmed it will continue to seek business development through bolt-on acquisitions and licensing deals.”
