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Let’s Talk about Bristol-Myers Squibb’s 2019 EPS Guidance

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Jan. 3 2019, Updated 11:48 a.m. ET

BMY’s performance

Today, Bristol-Myers Squibb (BMY) is trading at $45.85, ~11.86% lower than its previous day’s closing price.

On January 2, BMY stock closed at $52.43, ~14% higher than its 52-week low of $46.01 on January 26, 2017. The company hit its 52-week high of $70.05 on February 16, 2018.

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Reason for the stock price fall

Today, Bristol-Myers Squibb entered into an agreement to acquire Celgene (CELG) at an equity value of ~$74.0 billion. As per the agreement between Celgene and Bristol-Myers Squibb, the cash and stock consideration for Celgene’s shareholders is valued at $102.43 per Celgene share, a ~54% premium on Celgene’s closing price on January 2, as per the closure of the agreement.

This cash and stock consideration value is also a ~51% premium on Celgene’s 30-day volume-weighted average closing stock price before the signing of the agreement.

BMY’s EPS guidance

Bristol-Myers Squibb expects that in 2019, its GAAP (generally accepted accounting principles) EPS will be in the range of $3.75–$3.85. The company expects its non-GAAP EPS to be in the range of $4.10–$4.20 in 2019.

Bristol-Myers Squibb has also noted that its EPS guidance excludes the impact of today’s announcement that it will acquire Celgene along with any other future acquisitions and divestitures that the company may undertake.

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BMY’s EPS trends

Bristol-Myers Squibb reported EPS of $0.91, $0.23, and $1.16, respectively, in the first, second, and third quarters of 2018. Analysts expect the company to report EPS of $0.86 in the fourth quarter. They expect Bristol-Myers Squibb’s net EPS to be ~$3.16 in 2018.

Analysts’ recommendations for BMY

Of the 16 analysts tracking Bristol-Myers Squibb in January, four have given it “strong buys,” while two have given it “buys.” Nine analysts have given it “holds,” and one has given it a “sell.”

On January 3, Bristol-Myers Squibb had a consensus 12-month target price of $59.07, representing a potential ~29.14% return on investment over the next 12 months.

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