Here’s what to know beyond why Bristol Myers Squibb Company (BMY) is a trending stock
Bristol Myers Squibb (BMY) has been one of the most searched stocks on Zacks.com lately. So, you might want to consider some of the facts that could shape the stock’s performance in the short term.
Over the past month, shares of this biopharmaceutical company have returned -0.7%, compared to a change of -8.4% in the Zacks S&P 500 composite. During this period, the industry Zacks Medical – Biomedical and Genetics, which includes Bristol Myers, lost 4.7%. The key question now is: what could be the future direction of the title?
While press releases or rumors about a substantial change in a company’s trading outlook usually “trend” its stock and cause an immediate price change, there are always fundamental facts that ultimately dominate the take. purchase and retention decision.
Revisions to earnings estimates
Rather than focusing on anything else, at Zacks we prioritize assessing change in a company’s earnings projection. Indeed, we believe that the fair value of its shares is determined by the present value of its future earnings streams.
We basically look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest trading trends. And if earnings estimates increase for a company, the fair value of its shares increases. A higher fair value than the current market price stimulates investors’ interest in buying the stock, causing its price to rise. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
Bristol Myers is expected to post earnings of $1.84 per share for the current quarter, representing a year-over-year change of -8%. Over the past 30 days, the Zacks consensus estimate has changed by -0.1%.
For the current year, the consensus earnings estimate of $7.50 indicates a change of -0.1% from the prior year. Over the last 30 days, this estimate has changed by -0.1%.
For the next fiscal year, the consensus earnings estimate of $8.12 indicates a change of +8.3% from what Bristol Myers is expected to report a year ago. Over the past month, the estimate has changed by +0.3%.
With a strong externally audited track record, our proprietary stock rating tool, Zacks Rank, provides a more conclusive picture of a stock’s price direction in the short term, as it effectively harnesses the power of earnings estimate revisions. . Due to the magnitude of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Bristol Myers is ranked Zacks Rank #3 (Hold).
The chart below shows the evolution of the company’s consensus 12-month EPS estimate:
12 month EPS
Expected revenue growth
While a company’s earnings growth is arguably the best indicator of its financial health, nothing happens if it can’t grow its revenue. It is almost impossible for a company to increase its profits without increasing its revenue for long periods of time. Therefore, knowing the potential revenue growth of a business is crucial.
For Bristol Myers, the consensus sales estimate for the current quarter of $11.1 billion indicates a year-over-year change of -4.5%. For the current and future fiscal years, the estimates of $45.93 billion and $47.73 billion indicate variations of -1% and +3.9%, respectively.
Latest reported results and history of surprises
Bristol Myers posted revenue of $11.89 billion in the last quarter, representing a year-over-year change of +1.6%. EPS of $1.93 for the same period versus $1.93 a year ago.
Compared to the Zacks consensus estimate of $11.46 billion, reported revenue is a surprise +3.72%. Surprise EPS was +7.82%.
Over the past four quarters, Bristol Myers has exceeded consensus EPS estimates three times. The company has exceeded consensus earnings estimates every time during this period.
No investment decision can be effective without considering the valuation of a stock. Whether a stock’s current price accurately reflects the intrinsic value of the underlying business and the company’s growth prospects is a key determinant of its future price performance.
Compare the present value of a company’s valuation multiples, such as its price/earnings (P/E), price/sales (P/S), and price/cash flow (P/CF), to its own historical values help determine whether its stock is fairly priced, overvalued or undervalued, while comparing the company against its peers on these metrics gives a good idea of the reasonableness of its price.
The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to traditional and unconventional valuation metrics to rank stocks from A to F (an A is better than a B; a B is better than a C; and so on), is quite useful in determining whether a stock is overvalued, correctly priced, or temporarily undervalued.
Bristol Myers is rated B on this front, indicating that it is trading at a discount to its peers. Click here to see values for some of the rating metrics that led to this rating.
The facts discussed here and plenty of other information about Zacks.com might help determine whether it’s worth paying attention to the market buzz about Bristol Myers. However, its No. 3 Zacks ranking suggests it could perform in line with the broader market in the near term.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.