Bristol Myers Stock Trading Near 52-Week High: Time to Buy or Sell?

Core Viewpoint - Bristol Myers Squibb (BMY) has shown strong performance in the biotech sector, with a notable increase in stock price and positive quarterly results driven by newer drugs and strategic acquisitions [1][2][3]. Financial Performance - BMY's stock has risen 20.1% over the past six months, significantly outperforming the industry growth of 5.3% [1]. - The company reported better-than-expected third-quarter results, leading to an increase in annual earnings guidance [2]. - The Zacks Consensus Estimate for 2024 earnings per share (EPS) has increased from $0.76 to $0.88 over the past 30 days [13]. Drug Portfolio and Growth Drivers - New drugs such as Reblozyl, Breyanzi, Camzyos, and Opdualag are crucial for stabilizing revenue as legacy drugs face generic competition [3][4]. - Opdualag has achieved a 30% market share in the first-line melanoma setting in the U.S., contributing significantly to revenue [4]. - The recent FDA approval of Cobenfy for schizophrenia expands BMY's portfolio and validates its acquisition strategy [6]. Strategic Acquisitions - BMY has made significant acquisitions, including Mirati Therapeutics for $4.8 billion, enhancing its oncology portfolio with Krazati [7]. - The acquisition of RayzeBio added a proprietary radiopharmaceutical platform to BMY's offerings [7]. Challenges and Competition - BMY's legacy drug Revlimid faces generic competition, impacting its sales despite a positive earnings report [8]. - Eliquis, a major revenue contributor, is expected to face generic competition later in the decade [9]. - Other drugs like Sprycel and Pomalyst are also encountering challenges due to generics [10]. Cost Management and Debt - A strategic cost-reduction plan aims to save approximately $1.5 billion by the end of 2025, focusing on long-term returns and operational optimization [11]. - As of September 30, 2024, BMY's total debt-to-total capital ratio was 74.3%, raising concerns about its financial leverage [12]. Valuation Metrics - BMY's shares currently trade at a price/earnings ratio of 8.63x forward earnings, lower than the large-cap pharma industry average of 17.57x [13]. Conclusion - The recent stock rally indicates potential for a turnaround for BMY, with newer drugs expected to drive future growth despite the challenges posed by generic competition [16].