Long-term investors are going to have to be happy with Bristol-Myers Squibb's (NYSE: BMY) fat dividend -- currently at 5.3% -- and hopefully some P/E inflation because earnings will essentially end up in 2013 about where they are today.
|
Metric |
2009 |
2010 |
2011 |
2012 |
2013 |
|---|---|---|---|---|---|
|
Actual or projected non-GAAP earnings |
$1.85 |
$2.15-$2.25 |
N/A |
N/A |
At least $1.95 |
Source: Company press releases.
At its investor conference yesterday, Bristol-Myers laid out its plan for the loss of $6.1 billion in revenue after it and marketing partner sanofi-aventis (NYSE: SNY) start to see generic competition in 2012 for Plavix.
Bristol -Myers needs each arm of its three-pronged approach to succeed in order to reach that goal.
The first one is easy: cut some costs. As long as it doesn't axe the research and development budget too much, getting leaner seems like a free source of profits for investors.
The second prong is to grow its newer drugs. The company wants to expand the use of leukemia drug Sprycel as a first-line treatment rather than being used after Novartis' (NYSE: NVS) Gleevec. Bristol-Myers also has high hopes for its diabetes drug Onglyza, which it markets with AstraZeneca (NYSE: AZN). That one will be a hard sell given that it's competing against entrenched leader Januvia from Merck (NYSE: MRK), but it can certainly grow sales higher than the $4 million it saw in the fourth quarter.
Finally Bristol-Myers expects to launch five new drugs by 2012, assuming the regulatory authorities agree. The biggest of the group might be cancer drug ipilimumab, which Bristol-Myers owns the full rights to after acquiring Medarex. Yesterday the company said it would seek approval this year for the drug to treat advanced melanoma and plans to start a trial testing the drug in lung cancer. Both are hard-to-treat indications, which could mean quick adoption by doctors.
If Bristol-Meyers can hit its target, I have a hard time seeing shares decrease much from here. Essentially investors are getting a bond -- with a yield higher than that of similarly situated Pfizer (NYSE: PFE) -- that comes with a call on future growth in 2014 and beyond.
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