Readers of this space know that the investment bias is toward large-cap companies with demonstrated business models and who have a competitive advantage in established markets, preferably with a favorable, global trend as a support. And with that in mind, Bristol-Myers Squibb (NYSE: BMY) is worth a review. In general, analysts forecast low, single-digit revenue growth for BMY in FY2009, weighed-down primarily by unfavorable foreign currency trends.
Standout blood-thinner Plavix should continue to shine, with market share gains likely. Analysts also expect impressive results from new products Orencia (for rheumatoid arthritis) and Sprycel (for leukemia). BMY's nutritional products also should register a good year. The First Call FY2009/FY2010 EPS estimates for BMY are $1.93 to $2.17.
The risks? Pipeline setbacks have the potential to weigh on revenue, and hence shares, but it should be noted that BMY's major patent expiration period begins in FY2011-FY2012. Hence, with a demonstrated business model and a P/E of 13, the rating is tipped in favor of a Buy for BMY.
Stock Analysis: Bristol-Myers Squibb is a moderate-risk stock. Consider buying a 25% position in BMY now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your BMY position in the first half of 2009. Sell/Stop Loss if you were to buy shares in this company: $12.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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