Bristol-Myers Squibb (BMY) Shows Promise

Bristol-Myers Squibb Company (BMS) is engaged in the discovery, development, licensing, manufacturing, marketing, distribution and sale of pharmaceutical products on a global basis.

Business

Bristol-Myers Squibb  recently announced that the European Commission has approved Eliquis or apixaban for prevention of stroke and systemic embolism in adult patients with nonvalvular atrial fibrillation or NVAF with one or more risk factors.The marketing authorization for Eliquis is supported by the pivotal Phase 3 trials Aristotle and Averroes, which evaluated approximately 24,000 patients with NVAF in the largest completed clinical trial program conducted to date in this patient population.

Biocon Ltd, India’s top-listed biotechnology company,  signed an agreement with Bristol- Myers Squibb Co under which the U.S. drugmaker will have the option to get the worldwide license to its oral insulin drug program. Bristol Myers can choose to assume full responsibility for the development of the drug IN-105, if its mid-stage trial is successful.

Financials
Bristol Myers Squibb reported $0.41 earnings per share (EPS) for the quarter. Revenue for thequarter was down 30.1% on a year-over-year basis. However, Bristol-Myers Squibb demonstrates impressive cash flows.

Free Cash flows:

  Free Cash Flows
  TTM 2011 2010 2009
Net Income $2,808 $5,260 $4,513 $11,862
Depreciation and other noncash charges $108 $897 $699 $8,185
Funds from Operations (FFO) $2,700 $4,363 $3,814 $3,677
change in noncash current assets $3,758 $265 $488 $788
change in noncash current liabilities $1,256 $364 $256 $364
Operating Cash flows $7,714 $4,992 $4,558 $4,101
Capital Expenditures $507 $367 $424 $730
Free Operating Cash Flow $7,207 $4,625 $4,134 $3,371
         
Long Term Debt $6,608 $5,376 $5,328 $6,130

 

Cash flows from operations demonstrated impressive growth over the last three years. At the end of 2011, cash flows from operations stood at just below $5 billion as compared to $4 billion at the end of 2009. There has been healthy growth in free cash flows over the past three years, especially in the last twelve months. Free cash flows in the last twelve months have gone above $7 billion, rising by almost 61% from the start of the year. The company generates impressive free cash flows that provide solid coverage to its dividends.

Valuation
 
Bristol-Myers Squibb  is one of the best dividend paying stocks in the Biotech sector. BMY currently carries a dividend yield of 4.2%, While a tax hike of as much as 25% — the spread between the current 15% level and the new top tax bracket that will pay just under 40% in taxes — the company will still carry a yield over 3%.

Technicals

At the current price of around $33, BMY has a market capitalization of around $54 billion. It has a 52-week low of $30.64 and a 52-week high of $36.34. From a technical standpoint, this stock is currently trading below its 100-day MA of $33.15 and above its 250-day MA of $32.81. It has been showing support around $30.64 and resistance in the $33.70 price range. MACD (12,26) and RSI(14) are  increasing. The overall technical indicator shows a buy with the $39.36 target price in short term.

Conclusion

Shares of Bristol-Myers continue to be extremely attractive at current levels for the long term. The company’s dividend yield is sufficient to provide a very attractive income element.

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