NEW YORK (TheStreet) -- Bristol-Myers Squibb (BMY) continued its decline from Friday and was falling 2.18% to $49.83 on Monday after concerns about the rate at which the company is developing a new combination of cancer treatment drugs.
The New York City-based company announced Friday that it was not yet planning a late-stage trial to combine two of its promising lung cancer treatment drugs. Instead, the company revealed it would continue with mid-stage trials of the two drugs: an experimental medicine called nivolumab and an approved melanoma treatment called Yervoy, both of which strengthen the immune system's ability to combat cancer. Bristol-Myers Squibb then plans to transition the drugs into a greater Phase III trial.
The company also reported a 21.5% drop in its fourth-quarter profits despite an increase in drug sales because the results from the same period one year earlier included a $411 million tax benefit from the company's writing off a a failed experimental hepatitis C drug. The quarterly earnings of $726 million, or 44 cents a share, surpassed analysts' expectations.
TheStreet Ratings team rates BRISTOL-MYERS SQUIBB CO as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate BRISTOL-MYERS SQUIBB CO (BMY) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- BMY's revenue growth has slightly outpaced the industry average of 1.7%. Since the same quarter one year prior, revenues slightly increased by 8.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Pharmaceuticals industry and the overall market, BRISTOL-MYERS SQUIBB CO's return on equity exceeds that of both the industry average and the S&P 500.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 197.3% when compared to the same quarter one year prior, rising from -$711.00 million to $692.00 million.
- The current debt-to-equity ratio, 0.49, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that BMY's debt-to-equity ratio is low, the quick ratio, which is currently 0.55, displays a potential problem in covering short-term cash needs.
- Powered by its strong earnings growth of 197.67% and other important driving factors, this stock has surged by 54.58% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: BMY Ratings Report