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Bristol-Myers Squibb (NYSE:BMY) has taken two hits in recent years. The first hit came from the prospect of the expiration of one of its blockbuster anti-platetet drugs, Plavix, in 2012. The second hit came from proposed budgetary cuts for Medicaid and Medicare. Yet the stock is trading near its five -year high. We be believe the stock is a buy, for four reasons:

  • A Bullish chart. Amid an unsettled market, the stock has been trading decisively above its 100- and 200-day moving averages.

  • Strong financials. Hefty operating margins, above its its peers Pfizer (NYSE:PFE), Abbott Laboratories (NYSE:ABT), Eli Lily (NYSE:LLY) and Merck (NYSE:MRK).

BMY Financials Versus Peers In 2011:

Company
BMY
PFE
LLY
MRK
ABT
SPY
Dividend
4.60%
4.4%
5.5%
4.80%
3.80%
1.88%
Operating Margin
32.49
21.17
28.21
21.25
19.88
--
Quarterly Earnings Growth
32.7
9.70
-11.2
169
50
--
Quarterly Revenue Growth
4.20
-0.40
8.80
7.10
9
--

Source: Finance.yahoo.com

  • The market has already discounted the expiration of its blockbuster drugs and Medicaid and Medicare budgetary cuts.
  • A hefty, 4.60 percent dividend, compared to 1.88% for S&P 500 stocks.
  • A strong pipeline of new products, some of which have already gained FDA approval.

Disclosure: I am long BMY, LLY, PFE and ABT.

Source: 5 Reasons To Buy Bristol-Myers Squibb