BMY - Bristol Myers: Quality Fundamentals Suppressed By Interest Rates

2024-06-09 03:34:01 ET

Summary

• Bristol Myers Squibb has solid fundamentals that have been clouded by the rise of interest rates.
• The company's revenue is at risk due to higher debt burdens and future patent expiry concerns, but recent acquisitions and cost-saving measures provide potential for growth.
• BMY stock is undervalued compared to its sector, with a potential upside of 29% and a fair value estimate of $48 per share.

Overview

Every so often, there comes a time when dividend investors can catch a once-in-a-lifetime sale on a high-quality company. I believe that Bristol Myers Squibb ( BMY ) is this next opportunity, as the price has fallen nearly 40% over the last year. This price movement severely underperforms the greater health care sector ( XLV ) over the same time period. BMY seems to be highly vulnerable to the rise in interest rates and as rates remain at decade highs, this heavily suppresses the levels of growth that can be achieved going forward. Unfortunately, BMY's debt levels sit near all-time highs at one of the most inconvenient times over the last decade, which has only added to the downward momentum....

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