31 Jul

How BMY Is Valued following Its 2Q17 Earnings

WRITTEN BY Mike Benson

Valuation

Bristol-Myers Squibb (BMY) met Wall Street analysts’ consensus estimate for earnings per share (or EPS) in 2Q17, reporting EPS of $0.74.

BMY surpassed analysts’ consensus estimate for revenue, reporting revenue of $5.14 billion compared to the estimate of $5.08 billion in 2Q17.

How BMY Is Valued following Its 2Q17 Earnings

The chart above shows the comparison between analysts’ estimates and actual EPS over the last few quarters. Let’s take a look at some of BMY’s valuation multiples.

Forward PE

PE (price-to-earnings) multiples represent what one share of a company can buy for an equity investor. On July 28, 2017, Bristol-Myers Squibb was trading at a forward PE of ~17.9x, compared to the industry average of 15.7x.

The company is trading at a lower PE compared to its peer Eli Lilly and Company (LLY), which is trading at a forward PE of 19.1x. It’s trading at a higher forward PE compared to its peers Merck & Co. (MRK) and Pfizer (PFE), which are trading at PEs of 15.7x and 12.4x, respectively.

Forward EV-to-EBITDA

On a capital structure–neutral and excess cash–adjusted basis, Bristol-Myers Squibb is currently trading at ~15.2x, much higher than the industry average of ~10.5x. Other competitors Eli Lilly, Merck & Co., and Pfizer have forward EV-to-EBITDA multiples of 14.1x, 10.5x, and 10.6x, respectively.

Analysts’ recommendations

According to data released on July 28, 2017, Bristol-Myers’s stock value has fallen ~25.9% over the last 12 months. Analysts expect the stock’s price to improve ~3.5% over the next 12 months. Analysts’ recommendations show a 12-month target price of $57.23 per share for the stock, compared to its price of $55.27 per share on July 28, 2017.

Of the 23 analysts covering Bristol-Myers Squibb, ten have recommended “buys,” ten have recommended “holds,” and three have recommend “sells” on the stock. The consensus rating for Bristol-Myers Squibb is 2.43, which represents a moderate “buy” for value investors.

To divest company-specific risks, investors can consider ETFs such as the Vanguard Healthcare ETF (VHT), which holds 2.6% of its total assets in Bristol-Myers Squibb. VHT also holds 5.5% of its total assets in Pfizer, 4.9% in Merck & Co., and 2.3% in Eli Lilly.

Latest articles

German chip maker Infineon Technologies has reportedly raised 1.55 billion euros (~$1.74 billion) in capital by selling its shares to fund its acquisition of Cypress Semiconductor (CY). Infineon has sold ~113 million new shares at 13.70 euros each.

As of June 18, Dunkin’ Brands (DNKN) was trading at $80.07, an 8.9% rise since reporting its first-quarter earnings on May 2. Also, DNKN was trading at a premium of 29.8% from its 52-week low of $61.69 and a discount of 1.6% from its 52-week high of $81.40.

19 Jun

Are Lower Oil Prices Weighing on ExxonMobil Stock?

WRITTEN BY Maitali Ramkumar

ExxonMobil (XOM) stock has fallen 7.1% in the second quarter so far. Let's review ExxonMobil's stock performance in comparison to oil price changes and equity market movements in the quarter.

19 Jun

As Facebook Unveils Libra, MSFT and CRM Join a Blockchain Group

WRITTEN BY Mayur Sontakke, CFA, FRM

On June 18, Facebook (FB) launched Libra, its own cryptocurrency. On the same day, CoinDesk published another piece of blockchain news that didn’t receive as much fanfare as Facebook’s Libra news. Was the timing a coincidence? We think not.

Uber Technologies (UBER) has picked Melbourne as another test site for its flying taxi service known as UberAir. The Australian city is the first international test site Uber has chosen for its flying taxi service. The addition of Melbourne brings the number of test locations Uber has picked for its UberAir service to three.

Lyft (LYFT) and Uber Technologies (UBER) are pushing back against California legislation that would require them to recognize their drivers as employees rather than independent contractors. The legislation would require companies like Lyft to give their drivers the compensation and benefits spelled out under California’s employment regulations.

172.31.71.127