Is Bristol-Myers Squibb a Buy?

Bristol-Myers Squibb (NYSE:BMY) isn’t having a great year. The big pharma stock has spent most of 2019 in negative territory. Many investors weren’t happy with the decision to acquire Celgene (NASDAQ:CELG). And BMS has experienced some clinical-study disappointments for its blockbuster cancer drug, Opdivo.

But is Bristol-Myers Squibb still a smart pick for long-term investors? Let’s look at the reasons to consider buying the stock and the reasons to avoid it.

Why consider buying BMS

Growth and income. Those are the two reasons you should think about buying BMS stock. The income component is easier to address. Bristol-Myers Squibb’s dividend currently yields north of 3.4%. The drugmaker uses only 43% of its earnings to fund the dividend program, so those dividends should keep on flowing. 

Don’t underestimate the importance of the dividend. Over the last 10 years, the big pharma’s share price has risen close to 120%. But its total return during that period was over 200% thanks to its dividends.

Bristol-Myers Squibb certainly has the firepower to deliver solid growth in the future. Market researcher EvaluatePharma ranked the drugs that it thinks will be the biggest blockbusters of 2024; BMS claimed two of the top five spots, with Eliquis at No. 3 and Opdivo at No. 4.

In addition, BMS has several other drugs in its lineup with solid sales momentum. Autoimmune disease drug Orencia and cancer immunotherapy Yervoy continue to generate strong sales growth. The company’s brightest rising star right now is multiple myeloma drug Empliciti.

Acquiring Celgene really changes the growth dynamics for BMS. Celgene’s Revlimid already stands as one of the best-selling drugs in the world, and sales are still climbing. Multiple myeloma drug Pomalyst and cancer drug Abraxane are two other big winners for Celgene right now.

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