This big pharma just received FDA approval for its stem cell drug, Orencia, the first drug for the prevention of acute Graft versus Host Disease, in which the donor’s immune cells attack the recipient’s body. The shares have a current dividend yield of 3.66%, paid quarterly.
Bristol-Myers Squibb Company (BMY)
From Sure Dividend
Bristol-Myers Squibb is an under-appreciated big pharma company with a low price-to-earnings ratio of just 8.0 using the midpoint of management’s $7.40 to $7.55 in expected adjusted earnings-per-share for fiscal 2021.
Bristol-Myers Squibb is undervalued due to fears surrounding Revlimid—which is its highest sales product responsible for 28% of total sales through the first 9 months of 2021—because Revlimid will begin losing patent protection in 2022. But fears are overblown; Bristol-Myers Squibb’s management expects low to mid-single digit revenue growth from 2020 through 2025, thanks in large part to the company’s research and development capabilities.
We believe a conservative but fair price-to-earnings ratio for Bristol-Myers Squibb is around 13.5. This implies ~70% upside from current prices. Add in modest growth and the company’s solid 3%+ dividend yield, and Bristol-Myers Squibb is a compelling choice for income and serious appreciation potential in 2022.
Disclosure: I am long BMY.
Ben Reynolds, Sure Dividend Newsletter, suredividend.com, ben@suredividend.com, December 15, 2021