"Wall Street has been nonplussed about results from Bristol-Myers Squibb (NYSE: BMY); in my view, the Street is wrong," says Karim Rahemtulla in Xcelerated Profits Report.
"The stock has not joined many of its colleagues on the upside recently, but you can take Wall Street's lackluster opinion with a grain of salt. Yes, BMY's revenue of $5.02 billion fell a bit shy of projections for $5.13 billion, mostly due to a strong dollar negatively impacting sales.
"But sales grew 2.5% over the same period a year ago and earnings of 48 cents per share beat estimates by a penny. And with sales of Plavix rising 10% and demand for anti-depressant Abilify jumping 30%, it's hardly bad news.
"Moreover, BMY just extended its license on Abilify from 2012 to 2015, when the drug will face generic competition. In addition, gross margin grew to 72% from 68% as the company spun off lower margin non-pharmaceutical businesses.
"And CFO Jean-Marc Huet said the company didn't feel any impact of the economic downturn. Pending health care reform will likely keep a ceiling on large-cap pharma stocks for the time being. But while the process plays out, investors still receive a strong dividend yield.
"Ultimately, BMY has proven its ability to weather the economic storm with key drugs like Plavix and Abilify. Combine that with a strong pipeline and the possibility of it being bought out... and this company's future looks even better.
"If you don't own shares yet, then look at this recent sell off as a buying opportunity and take advantage of it."
Steven Halpern's TheStockAdvisors.com offers a free daily overview of the favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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