Bristol Myers Stock Rises 16% in 3 Months: Buy, Sell or Hold?

Core Viewpoint - Bristol Myers Squibb Company (BMY) has shown a positive performance recently, recovering from a 52-week low of $39.35, with shares rising 16.2% over the past three months, outperforming the industry and S&P 500 [1][2] Group 1: Financial Performance - BMY's second-quarter results exceeded expectations, driven by strong sales from newer drugs and consistent growth in the immuno-oncology drug Opdivo, which helped offset declines in sales of older drugs [1][3] - The company raised its annual earnings guidance following the second-quarter results, indicating improved financial outlook [1] - In the first half of 2024, Eliquis, Opdivo, and Revlimid accounted for nearly 61% of BMY's total sales of $24.1 billion, highlighting the importance of these drugs to the company's revenue [6] Group 2: Drug Portfolio and Growth Drivers - Newer drugs such as Opdualag, Reblozyl, and Breyanzi have performed well, stabilizing revenue amid generic competition for legacy drugs [3] - The collaboration with Merck on Reblozyl has been particularly successful, and the drug is expected to significantly contribute to BMY's revenue in upcoming quarters [3] - BMY is pursuing strategic acquisitions to enhance its drug pipeline, including the acquisition of Karuna Therapeutics, which adds a schizophrenia treatment candidate under review [4] Group 3: Challenges and Strategic Initiatives - BMY faces challenges from generic competition affecting key drugs like Revlimid and anticipates similar pressures on Eliquis and Opdivo in the future [5][6] - A strategic cost-reduction plan announced in April 2024 aims to save approximately $1.5 billion by the end of 2025, focusing on key growth brands and operational optimization [7] - As of June 30, 2024, BMY's total debt-to-total capital ratio was 75.4%, raising concerns about the company's high debt levels amid its acquisition strategy [8] Group 4: Valuation and Market Position - Despite recent gains, BMY's shares are still at the low end of their 52-week range and below their all-time high from November 2022, trading at a price/sales ratio of 2.14x, lower than the industry average [9] - The Zacks Consensus Estimate for 2024 earnings per share has increased to $0.77 from $0.55 over the past 60 days, reflecting a positive adjustment following the company's raised guidance [11] Group 5: Conclusion - While BMY has shown signs of recovery, the company faces significant challenges ahead, and the sustainability of its recent performance remains uncertain [13] - For current investors, maintaining their position may be prudent given the attractive dividend yield of 4.87% [13]