Bristol Myers Squibb (BMY) topped fourth-quarter expectations in February, but BMY stock floundered following the report.
Bullishly, worldwide sales of Opdivo returned to growth in the fourth quarter. Revenue from the blockbuster cancer drug inched up 2%. That was the first time Opdivo sales have grown since early 2019.
But Wall Street is worried about the future of Celgene cancer drug Revlimid. Revlimid is now Bristol Myers’ biggest moneymaker. And it’s soon to face generic rivals.
All of this comes on the heels of a disappointment for former Celgene shareholders. Bristol promised to make a payout if it gained Food and Drug Administration approval for three key drugs by specific deadlines. But it failed to gain one approval — so the payout is now null.
Bristol also recently wrapped the $13.1 billion takeover of MyoKardia, a heart-disease biotech.
So, is now the right time to buy BMY stock?
Bristol Myers Expands Its Drugs Wheelhouse
After buying Celgene, the pharmaceutical company’s biggest products are cancer treatments known as Revlimid and Opdivo, and a blood thinner called Eliquis.
In the fourth quarter, worldwide Opdivo sales edged up 2%. U.S. sales of the cancer drug fell 2%, however. And, in 2020, Opdivo sales dipped 3%. Meanwhile, Merck‘s (MRK) rival cancer drug, Keytruda, grew 28% in the fourth quarter and 30% in 2020.
Keytruda sales aren’t just outpacing Opdivo in growth. They’re also much bigger. In 2020, Opdivo brought in $6.99 billion. Over the same period, Keytruda generated $14.38 billion in sales.
However, total revenue for Bristol Myers popped 39% to $11.07 billion. Adjusted earnings of $1.46 per share grew 20%. Both measures beat expectations. Bristol Myers noted the strong sales growth was primarily due to the Celgene buyout, which completed in November 2019.
It will be key to watch earnings results over time to see if Bristol Myers can retain the strong growth post Celgene takeover. CAN SLIM rules for investing advise investors to seek companies with recent quarterly sales and earnings growth of 20%-25%.
For the first quarter, analysts polled by FactSet expect Bristol Myers earnings to rise 5% to $1.81 a share. They predict $11.17 billion in sales, up 4%.
What Do Annual Metrics Say About BMY Stock?
Shares of BMY stock ended 2020 with a 3.4% decline. As of midday trading on Feb. 25, BMY stock had risen a fraction this year.
Last year, sales soared 63% to $42.52 billion, benefitting from a year of Celgene drug sales.
For 2021, analysts call for Bristol Myers to earn $7.49 per share, up 16%, on $46.3 billion in sales, up 9%. In the future, however, analysts are watching for generic versions of cancer drug Revlimid. Teva Pharmaceutical (TEVA) is set to launch a generic in 2022.
BMY Stock Technical Analysis: Shares Consolidate
Shares of BMY stock are engaged in a lengthy consolidation with a buy point at 68.44. As of Feb. 25, Bristol Myers stock was in line with its 50-day moving average and above its 200-day moving average.
The CR measures a stock’s key technical and fundamental metrics. That CR puts BMY stock in the top half of all stocks. The RS Rating tracks the stock’s 12-month performance vs. all other stocks on a 1-99 scale. Market-leading stocks have an RS Rating of 80 or higher.
BMY stock ranks sixth among the 35 pharmaceutical companies in the Medical-Ethical Drugs industry group based on CR. The group itself is lowly ranked. It ranks No. 171 out of 197 industry groups tracked by Investor’s Business Daily.
Recent News From The Pharma Company
As part of the Celgene buyout, Bristol Myers promised to pay $9 per Contingent Value Right owned by former Celgene shareholders. However, the FDA failed to approve cancer drug liso-cel by a year-end 2020 deadline. That killed the payout for Celgene shareholders.
But Bristol Myers remains sunny on other opportunities.
This quarter, the company plans to ask for FDA approval of MyoKardia’s heart drug mavacamten. Bristol calls it a potential first-in-class cardiovascular medicine for the treatment of obstructive hypertrophic cardiomyopathy, a chronic and potentially fatal heart disease.
And, in mid-January, Bristol Myers said the FDA accepted two applications for approval of Opdivo in forms of stomach and esophageal cancer.
In February, Bristol Myers received approval in Europe for Inrebic, a treatment for patients with new or previously treated myelofibrosis. Myelofibrosis is a rare type of blood cancer.
Other BMY Stock News
During the summer, Bristol Myers said the FDA approved its Acceleron Pharma (XLRN)-partnered anemia drug, luspatercept. Now called Reblozyl, the drug can treat patients with transfusion-dependent myelodysplastic syndromes or beta thalassemia.
Bristol Myers launched Zeposia as a multiple sclerosis treatment in early June. The drug also gained European approval in late May. Zeposia is the first in its drug class that doesn’t require observation for side effects following the first dose.
So, Is BMY Stock A Buy Right Now?
No, BMY stock is not a buy right now.
The pharmaceutical company has yet to top a buy point out of a long-term consolidation. It’s best to add shares after a stock has surpassed a buy point and is within the 5% chase zone.
Although sales and earnings grew in the fourth quarter, the addition of Celgene is largely to credit. It will be key to watch for an apples-to-apples comparison in early 2021.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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