Why Bristol Myers Squibb Jumped Nearly 10% on Friday

Bristol Myers Squibb (NYSE: BMY) Shareholders are certainly ending the trading week on a positive note. Shares of the drugmaker are up 9.6% as of 1:14 p.m. ET, according to data from S&P Global Markets Insightsin response to a surprisingly strong second-quarter report and subsequently upgraded full-year forecasts.

Bristol Myers Squibb is running at full speed

Bristol Myers Squibb has, admittedly, developed new drugs, such as Opdivo, Yervoy, and Opdualag. These cancer treatments helped the company generate total revenue of $5.6 billion, up 18% from the previous year. At the same time, its legacy portfolio, largely comprised of the blood thinner Eliquis and the oncology drug Revlimid, still managed to generate modest growth. Second quarter revenue increased Earnings per share rose 9 percent year-over-year to $12.2 billion, beating estimates of just $11.5 billion. Earnings per share of $2.07 rose from a year-ago comparison of $1.75, also beating estimates of $1.63 per share.

That pace of growth isn’t expected to slow down anytime soon. Bristol Myers Squibb slightly raised its full-year revenue guidance, in addition to raising its 2024 earnings forecast from a range of just $0.40 to $0.70 per share to a new forecast of $0.60 to $0.90 per share.

THE pharmaceutical The giant’s financial results should be improved by the launch in the United States of the treatment for schizophrenia and neurodegenerative diseases KarXT later this year.

Don’t be intimidated – look at the big picture

A jump as big as this is hard to follow, which is why many people simply don’t buy stocks after such moves.

Bristol Myers Squibb, however, may be an exception to this logic. Despite Friday’s huge surge, shares are still 40% below their November 2022 high, closer to the multi-year low hit earlier this month.

What’s the problem? Investors feared the worst for Eliquis and Revlimid before sales of the company’s new drugs hit their full potential. We can now see that those concerns may have been overblown. However, the stock remains undervalued relative to the company’s potential. It’s also an attractive dividend prospect, with recent weakness pushing the forward dividend yield up to 5.3%.

This is based on a dividend, by the way, which has been increased every year for the last 15 years.

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