The earnings report from Bristol-Myers (BMY) on January 26 is likely a non-event for the stock. Last week, the stock already dropped an enormous 12.9%, on news that it will not fast-track drug approval for Opdivo. Opdivo treats lung cancer.
BMY stock is not inexpensive even after the drop. At around a 25x P/E, the company’s failure to fast-track the combination treatment of Opdivo (nivolumab) and Yervoy (ipilimumab) for first line lung cancer may lead to further declines in the share price. This adds to the company’s setback for the year: it is expected to report a 22.30 percent decline in earnings.
Though risks are rising that Bristol-Myers stock may fall further, the company’s setback is temporary. Eventually, the combination treatment will win FDA approval and the stock will respond accordingly. The drug, when approved, will treat a multitude of other cancers. Investors holding BMY also get paid a dividend yielding over 3 percent.
BMY is not for traders, since it requires patience and a long time horizon of several quarters. The quarterly report should offer no surprises and may even bring good news to shareholders if it beats expectations.
Last quarter, BMY earned $0.77 per share, beating consensus by $0.12 a share, on revenue of $4.92 billion.
