Today’s news: Bristol-Myers (BMY) up on news of a successful drug trial; CIT Group (CIT) reported a strong earnings beat.
Bristol-Myers Squibb Company (BMY – yield 2.9%) – The stock rose 6% this morning after the company announced positive results for a lung cancer treatment. The Phase 3 drug trial, for a treatment named CheckMate-9LA, evaluated Opdivo plus low-dose Yervoy given concomitantly with two cycles of chemotherapy vs. chemotherapy alone for the first-line treatment of advanced non-small cell lung cancer. The study met the primary endpoint by demonstrating superior overall survival.
BMY is quite undervalued vs. its large-cap pharmaceutical peer group and slated for tremendous earnings growth in 2020, largely due to their acquisition of Celgene (CELG). The stock is now trading at 56—a long-term resistance level. If you are a trader, this might be your maximum upside in the coming weeks. If you are an investor, hold your shares and consider buying more on pullbacks to 53. Buy.
CIT Group (CIT – yield 3.2%) announced third quarter results this morning. Adjusted diluted EPS of $1.29 beat the $1.21 Thomson Reuters estimate of nine analysts. (The Zacks estimate of $1.29 included just four analysts.) Net revenue of $454 million missed the estimate of $461 million. Net charge-offs were down significantly vs. the prior quarter. CEO Ellen R. Alemany commented, “We grew average core loans and leases by two percent, had strong credit performance, maintained disciplined expense management and increased tangible book value per share to $55.60. We expect the acquisition of Mutual of Omaha Bank to accelerate our strategic plan and improve returns. We remain focused on closing the transaction in the first quarter, pending regulatory approval.” The company remains on track to achieve their operating expense reduction target.
CIT Group provides financing, leasing and advisory services to small and middle market businesses, consumer markets, and the real estate and railroad industries. CIT is an undervalued growth & income stock. The 3%-4% drop in the share price this morning can likely be attributed to a complete lack of research reports or accurate news on CIT’s quarterly results. I would expect analysts to bring their institutional clients up to date on CIT’s successes and outlook in the coming days, and for buying activity to resume.
Note that the stock is trading at about 44, way below the 55.60 book value, which rose 11% during the last year. I expect CIT to rebound promptly from today’s lower price. There’s upside resistance at 47, and again in the low 50s. Buy CIT now. Buy.