I am neutral on Bristol Myers (BMY) as Wall Street analysts are only marginally bullish on it and the average price target indicates week upside potential over the next year, though the valuation multiples look cheap relative to historical averages.
Bristol Myers is a multinational company headquartered in New York City, and operating in the pharmaceutical industry.
The global biopharmaceutical company researches, discovers, develops, and delivers medicines to patients in several countries. The company has produced a long line of vitamins, personal care products, beauty products, medical devices, and pharmaceuticals.
In the United States alone, Bristol Myers manufactures, markets, and distributes more than 36 different drugs. According to a 2019 report, Bristol Myers’ three drugs, namely Opdivo, Eliquis, and Orencia, accounted for three-fourths of the company’s total sales.
Strengths
Bristol Myers is a popular name amongst global biopharmaceuticals, and has contributed drugs for diseases such as cancer, hepatitis B, HIV/AIDS, diabetes, cardiovascular disease, psychiatric disorders, and rheumatoid arthritis.
The company has created an unrivaled global footprint with over 44,000 employees and a consistent appearance on the Fortune 500 list of the largest U.S. corporations.
Additionally, Bristol Myers also has a successful track record of mergers, acquisitions, and new product launches. The company has also invested in philanthropy work, distributing free medication to U.S. citizens dealing with a financial crisis.
It is constantly working on boosting its brand image through partnerships and has developed powerful alliances for technological growth.
Recent Results
In 2020, Bristol Myers garnered revenues totaling $42.2 billion from global sales – which is something the CEO says he is proud of, especially because the company managed to secure several accomplishments during the pandemic.
The GAAP year-over-year change reached 63%, and the pro forma full-year change was at 7%.
According to the consolidated statement of earnings, 2020, the company faced a net loss of $9,015 million, which led to a $3.99 loss per common share for basic and diluted shares.
The comprehensive loss attributable to Bristol Myers reached $9,334 million. Despite the losses, the cash dividends declared per common share remained consistent at $1.84.
Valuation Metrics
BMY stock looks attractively priced here as it trades below its historical averages on an EV/EBITDA ratio and price to normalized earnings per share basis.
Its EV/EBITDA ratio is 7.8 times compared to its historical average of 12.1 times, and its price to normalized earnings per share ratio is 8 times compared to its historical average of 17.73 times.
Analysts expect revenue to increase by 2.2% in 2022, and normalized EPS to increase by 5.2% in 2022.
Wall Street’s Take
According to Wall Street analysts, BMY earns a Moderate Buy analyst consensus based on four Buy ratings, five Hold ratings, and zero Sell ratings in the past three months. Additionally, the average Bristol Myers price target of $65.83 puts the upside potential at 5%.
Summary and Conclusions
BMY stock is backed by a leading global biotechnology and pharmaceutical business that possesses significant intellectual property rights, has a robust and proven research and development team, and a promising pipeline that could result in solid growth rates for years to come. Moreover, its valuation multiples look quite cheap relative to its historical averages.
That said, analysts are only marginally bullish on the stock and the average price target implies for upside potential over the next year.
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