Bristol Myers Squibb (BMY) lagged Wall Street's first-quarter expectations in late April, leading BMY stock to tumble far below a looming breakout.X
Further, a panel of experts recommended the Food and Drug Administration revoke the approval for Bristol's Opdivo as a second option for liver cancer patients. The approval was accelerated, so it was contingent on the benefit holding up under additional testing. Additional tests were a flop, the committee said. The full FDA doesn't have to follow the committee's vote, but it often does.
This followed the committee's recommendation to retain the approval for Keytruda, a cancer drug from Merck (MRK) for the same use.
Opdivo has a variety of uses, however. In late April, the FDA agreed to a speedy review for Opdivo in patients with a form of bladder cancer. European officials also recommended approving Opdivo plus fellow cancer drug Yervoy for a form of lung cancer.
Bristol also recently wrapped the $13.1 billion takeover of MyoKardia, a heart-disease biotech.
So, is now the right time to sell 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 first quarter, Opdivo sales fell 3% to $1.72 billion. Meanwhile, Keytruda sales surged 19% to nearly $3.9 billion. So, Keytruda sales aren't just outpacing Opdivo in growth, they're also bigger. Last year, Opdivo brought in $6.99 billion while Keytruda sales were $14.38 billion.
More bullishly for BMY stock, revenue from its two biggest drugs increased in the first quarter. Revlimid sales inched 1% higher to $2.94 billion. Sales of Eliquis jumped 9% to $2.89 billion.
Total revenue edged up 3% year over year to $11.07 billion. Adjusted earnings of $1.74 per share rose 1%. Both measures missed expectations.
After acquiring Celgene, Bristol Myers had five quarters of particularly bullish sales and profit growth. But now that Celgene is fully digested, the impact is more muted on financials, taking BMY stock out of CAN SLIM rules for investing. Investors are advised to seek companies with recent quarterly sales and earnings growth of 20%-25%.
For the second quarter, analysts polled by FactSet expect Bristol Myers earnings to rise 17% to $1.90 a share. They predict $11.35 billion in sales, up 12%.
What Do Annual Metrics Say About BMY Stock?
BMY stock ended 2020 with a 3.4% decline. As of midday trading on May 5, BMY stock had risen 3.7% 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 $7.47 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
BMY stock is consolidating with a buy point at 67.26. On May 5, Bristol Myers stock was above both its 50-day moving average and 200-day moving average.
BMY stock has a Composite Rating of 53 and a Relative Strength Rating of 28.
The CR measures a stock's key technical and fundamental metrics. That CR puts BMY stock in the top one-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 eighth among the 35 pharmaceutical companies in the Medical-Ethical Drugs industry group based on CR. The group itself is lowly ranked. It ranks No. 175 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.
Another ding on BMY stock: An independent panel recommended the FDA revoke the approval of Opdivo as a second option in liver cancer treatment. But the panel upheld the accelerated approval for Merck's Keytruda for the same use.
Meanwhile, the panel suggested revoking the approval for Keytruda as a third option for patients with a type of stomach cancer. The panel upheld other accelerated approvals, however. That included bladder-cancer approvals for Keytruda and Roche's (RHHBY) Tecentriq and approval for Tecentriq in triple-negative breast cancer.
But Bristol Myers remains sunny on other opportunities.
On March 26, the FDA approved a multiple myeloma drug from Bristol Myers and Bluebird Bio (BLUE) called Abecma. Formerly known as ide-cel, Abecma is the first CAR-T treatment to go after the B-cell maturation antigen, or BCMA.
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.
So, Is BMY Stock A Sell Right Now?
No, BMY stock is not a sell right now. But it's also not a buy.
The pharmaceutical company has yet to top a buy point out of a consolidation. It's best to add shares after a stock has surpassed a buy point and is within the 5% chase zone. Investors are advised to sell when a stock falls 7%-8% below its entry.
Sales and earnings tacked on low single-digit percentage growth in the first quarter. That's not enough to label BMY stock a CAN SLIM stock.
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Follow Allison Gatlin on Twitter at @IBD_AGatlin.