NEW YORK (TheStreet) -- Shares of Bristol-Myers Squibb Co. (BMY) are down 1.09% to $57.97 in pre-market trading on Thursday after the company was downgraded to "equal-weight" from "overweight" at Morgan Stanley.
The firm maintained its $60 price target for the biopharmaceutical company.
Morgan Stanley said it lowered Bristol-Myers Squibb's ratings because the company is now discounting higher odds of success for new drug in development, creating unbalanced risk-reward dynamic.
"We feel BMY stock is now discounting higher odds of phase 3 squamous lung (CheckMate 017) success in the wake of phase 2 (CheckMate 063) data," said Morgan Stanley analyst David Risinger. "Risk-reward now appears balanced."
Separately, 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 largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.50, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.15, which illustrates the ability to avoid short-term cash problems.
- 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.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- BRISTOL-MYERS SQUIBB CO's earnings per share declined by 37.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BRISTOL-MYERS SQUIBB CO increased its bottom line by earning $1.55 versus $1.15 in the prior year. This year, the market expects an improvement in earnings ($1.79 versus $1.55).
- You can view the full analysis from the report here: BMY Ratings Report