Why Bristol Myers Squibb rose nearly 10% on Friday

Bristol Myers Squibb (NYSE: BMY) shareholders certainly end the trading week on a high note. The drugmaker’s shares rose 9.6% as of 1:14 p.m. ET, according to data from S&P Global Market Intelligence, in response to a surprisingly strong second-quarter report and later raised guidance for the full year .

Bristol Myers Squibb is firing on all cylinders

Credit new drugs from Bristol Myers Squibb like Opdivo, Yervoy and Opdualag. These cancer-fighting treatments led the company’s so-called growth portfolio to total revenue of $5.6 billion, up 18% year-over-year. Meanwhile, its legacy portfolio — made up largely of blood thinner Eliquis and oncology drug Revlimid — still managed to produce modest growth. Overall, the Q2 top line rose 9% year-over-year to $12.2 billion, beating estimates of just $11.5 billion. Earnings per share of $2.07 were up from a year ago of $1.75, also beating estimates of $1.63 per share.

This pace of progress is not likely to slow down in the near future either. Bristol Myers Squibb slightly raised its full-year earnings guidance in addition to raising its 2024 earnings guidance from a range of just $0.40-$0.70 per share to a new forecast of $0.60 $-$0.90 per share.

The pharmaceutical giant’s bottom line is likely to be boosted by the US launch of schizophrenia and neurodegenerative disease therapy KarXT later this year.

Don’t get carried away — look at the big picture

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

Bristol Myers Squibb, however, may be a worthy exception to this line of thinking. Even with Friday’s sizable rally, shares are still 40% below their November 2022 high, closer to the multi-year low hit earlier this month.

What’s up? Investors largely feared the worst for Eliquis and Revlimid before sales of the company’s newer drugs peaked. We can now see that these worries were exaggerated. However, the stock is still undervalued compared to the company’s potential. It’s also an attractive dividend prospect, with its recent weakness pushing its forward dividend yield up to 5.3%.

That’s based on a dividend, by the way, that’s been collected every year for the past 15 years.

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James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bristol Myers Squibb. The Motley Fool has a disclosure policy.

Why Bristol Myers Squibb Jumped Nearly 10% Friday was originally published by The Motley Fool