Biopharmaceutical company known above all in the treatment of cardiovascular, oncological and fibrotic diseases, in the last period has started a simplification process aimed at making the company’s core business as efficient as possible.
2020 can be the turning point for the company, also supported by the excellent signs of various profitability indicators.
The evaluation of the company
- Bristol Myers Squibb (NYSE: MBY) is a 174% undervalued stock having a target price according to the fair value calculation at $ 177.70 compared to the current price at $ 64.91.
- The Price to Earnings ratio shows a lower value than the average of its competitors: 18.7x vs 21.3x. Investing in the title is still convenient.
- Growth for the next 3 years is estimated to be higher both in terms of revenues (10.9% vs 5.2%) and in terms of net profit (53.6% vs 21.8%).
- From the point of view of one of the most important profitability indicators, ROE, an above-average return on equity is estimated: 32% vs 19.9%.
- Net Financial Position enviable for the company, short-term assets largely cover short and long-term financial debt.
- Despite an increase in debt to equity in the last year, from 50.5% to 141.9%, it is under control thanks to enormous corporate liquidity.
- Finally, the dividend yield of Bristol Myers Squibb is industry average (2.8% vs 2.7%).
What is the average consensus of analysts?
14 Wall Street analysts have evaluated the stock in recent months where most of them (8 out of 14) recommend the purchase of shares, estimating an increase in the stock price between 11.8% and 20.3%.
5 of them gave Hold recommendation, estimating a slight decrease in the stock for the next few months of 2.8%.
Bristol Myers Squibb stock is trading at $ 64.54, down 0.46%.
Based on the parameters mentioned above, it is advisable to buy the stock only in a weekly closing above $ 64.75 with a stop loss of $ 61.80 and two medium / long-term objectives:
1) $ 72.50 for the first half of 2020
2) $ 78 for the end of the year.