We’re adding to our position in a stock that just landed a big Wall Street endorsement
Shortly after the opening the bell, we will be buying 300 shares of Bristol Myers Squibb at roughly $56.50. Following the trade, Jim Cramer’s Charitable Trust will own 1,200 shares of BMY, increasing its weighting in the portfolio to roughly 1.9% from about 1.4%. Wall Street’s stretch of bad breadth may have finally caught up to it. The S & P Short Range Oscillator, our trusted momentum indicator, hit oversold after Friday’s mixed session, dropping to minus 4.1%. When the Oscillator becomes oversold, our discipline says it’s time to get opportunistic and buy stocks of quality companies. In Thursday’s edition of the Hometretch , we pointed out that Bristol Myers Squibb’s recent slide to the mid-$50s looked like an opportunity, especially since that meant the stock had given back about half its gains from the trial failure of AbbVie ‘s rival schizophrenia drug. Analyst at Jefferies now share our bullish long-term view on Bristol Myers. The analysts upgraded their rating to buy from hold on Monday and raised their price target to $70 from $63. Jefferies provided three main reasons for their call, which suggests 25% upside from the stock’s current price. Analysts believe the drugmaker’s best-in-class schizophrenia drug Cobenfy is on track to be a major blockbuster. They currently model $11 billion in peak sales for the drug, well above the current Wall Street consensus of $6 billion. Jefferies also is becoming more upbeat about Bristol Myers’ pipeline. One drug the analysts highlighted was Milvexian, a blood-thinning medication that’s currently in three late-stage trials for atrial fibrillation, acute coronary syndrome, and secondary stroke prevention. Jefferies’ third bullish point was more visibility into the income statement and Bristol Myers’ ability to navigate its upcoming patent cliff, especially from the higher Cobenfy sales. We agree with all three reasons and believe the stock trading below 8 times estimated 2025 earnings per share with a 4.4% dividend yield is too cheap. We first bought Bristol Myers in late November and most recently added to our position on Dec. 4. (Jim Cramer’s Charitable Trust is long BMY. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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