By Peet Serfontein & Hashmeel Suka.
Bristol-Myers Squibb is a leading biopharmaceutical company engaged in the development, licensing, manufacturing and distribution of therapeutic drugs and nutritional products. It provides treatments for various illnesses including cancer, heart disease, HIV and Aids, diabetes, rheumatoid arthritis, and psychiatric disorders.
The company operates about 190 manufacturing, research and development (R&D), administration, storage, and distribution sites globally. BMY has seven large manufacturing sites as well as nine major R&D sites in the US, where the market accounts for ~70% of revenue.
Technically, the stock is trading near the lowest level of the linear regression channel (two standard deviations below the mean regression line), within an upward sloping trend. This indicates that the stock is potentially oversold (and undervalued). At current levels, it makes for an attractive entry point, given that the overall direction is bullish.
The stock is trading below its 200-day simple moving average of ~$56.50, making this a contrarian trade.
Upside price momentum, according to the MACD indicator as well as sidewards movement of the on-balance volume indicator, supports our bullish view.
Share Information
| Share Code | BMY US |
|---|---|
| Industry | Pharmaceuticals, Biotechnology |
| Market Capital (USD) | 107.74 billion |
| One Year Total Return | -17.71% |
| Return Year-to-Date | 5.04% |
| Current Price (USD) | 53.28 |
| 52 Week High (USD) | 71.07 |
| 52 Week Low (USD) | 47.58 |
| Financial Year End | December |
| The stock price has come under pressure over the past 12 months, though various technical indicators suggest a recovery going forward. |
Consensus expectations
(Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 7.51 | 6.91 | 7.13 | 6.52 |
| Growth (%) | -7.98 | 3.21 | -8.58 | |
| Dividend Per Share (USD) | 2.31 | 2.41 | 2.53 | 2.64 |
| Growth (%) | 4.50 | 4.72 | 4.47 | |
| Forward PE (times) | 7.66 | 7.59 | 8.17 | |
| Forward Dividend Yield (%) | 4.57 | 4.78 | 4.96 | |
| Expected earnings growth over the medium term looks volatile, though the outlook for the long term is still positive. | ||||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position | CARZ - Profit Take (Close the position) |
CVX - Buy (Continue to hold) |
FSLR - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 53.61 | 147.89 | 159.06 |
| Current | 59.48 | 149.37 | 160.35 |
| Movement | 10.9% | 1% | 0.8% |
| The ETF has reached our intended target price and we exited the trade. |
The stock price is holding above key support, and this remains attractive. The stock remains below its 200-day moving average and we maintain a counter-trend strategy. Fading upside momentum is a concern.
Our profit target is $167, with a stop-loss of $142.07 Exit the position around 28 June 2024. |
A price action near the lower end of the regression channel remains attractive. The stock remains below its 200-day moving average and we maintain a counter-trend strategy. Upside price momentum is supportive.
Our profit target is $190, with a trailing stop-loss of $144. Exit the position around 9 April 2024. |
| Share Name and position | |||
|---|---|---|---|
| Entry | 41.57 | 239.07 | 7.14 |
| Current | 41.86 | 237.62 | 7.09 |
| Movement | 0.6% | -0.6% | -0.7% |
|
The development of a symmetrical triangle pattern remains of interest. The ETF remains above its 200-day moving average. Upside price momentum has regained strength, which is encouraging.
Our profit target is $48, with a trailing stop-loss of $40.80. Exit the position around 14 June 2024. |
Presence of a well- established price range remains attractive. The stock is trading below its 200-day moving average and we maintain a counter-trend strategy. Fading upside momentum is a concern.
Our profit target is $265, with a trailing stop-loss of $230. Exit the position around 24 April 2024. |
The formation of a falling wedge pattern remains attractive. The stock remains below its 200-day moving average and we maintain a counter-trend strategy. Upside price momentum remains supportive.
Our profit target is $8.50, with a trailing stop-loss at $6.65. Exit the trade by 5 June 2024. |
