Wall Street didn't like what Bristol-Myers Squibb (NYSE:BMY) had to say on Thursday -- at least not all of it -- when the big drugmaker reported its results for the first quarter of 2017. Bristol-Myers Squibb (BMS) handily beat the consensus analysts' earnings estimate but narrowly missed Wall Street's revenue estimate for Q1. Investors who had hoped for a solid rebound after BMS stock's slide of nearly 20% so far this month were disappointed.

But is BMS stock a buy after its mixed Q1 results? There are several reasons to think that it is.

Hand holding smartphone with purple question mark displayed in front of enlarged image of a scientists' hands holding test tubes

Image source: Getty Images.

About those results

Let's first take a look at BMS' first-quarter numbers. Yes, the company failed to hit Wall Street's revenue expectation of $5.24 billion, but BMS was close, posting Q1 revenue of $5.19 billion -- up 5.4% year over year. More important, the drugmaker's adjusted earnings per share (EPS) of $0.94 trounced Wall Street's earnings estimate of $0.85. 

There certainly were some headwinds during the quarter. As expected, sales for BMS' older antiviral drugs continued to decline. And while Sprycel and Yervoy enjoyed solid growth in 2017, sales for both cancer drugs fell in Q1 compared to the prior-year period. 

BMS also received help in the first quarter that had nothing to do with the company's efforts. For example, 4% of the year-over-year revenue increase stemmed from the positive impact of foreign exchange. The company also benefited from U.S. corporate tax reform, with an effective tax rate of 16.9% in Q1 compared to 21.9% in the prior-year period.

Still, BMS reported growth for both its top and bottom lines, thanks to strong performances for Opdivo, Eliquis, and Orencia. In addition, the company's cash position continued to look good, with $9 billion in cash, cash equivalents, and marketable securities on hand at the end of the first quarter.

What the numbers don't show

The problem with any quarterly update is that it's just a snapshot in time and doesn't reflect what could lie ahead. There are several positives for BMS that should fuel future growth that the company's Q1 results don't address.

First, BMS won Food and Drug Administration (FDA) approval for a new dosing schedule for Opdivo on March 6. This change allows physicians to administer Opdivo to patients every four weeks instead of every two weeks for most of the approved indications for the drug. In addition, Opdivo was approved for a shorter 30-minute infusion for all approved indications. Opdivo now enjoys an advantage related to patient convenience that Merck's (NYSE:MRK) Keytruda doesn't.

Even more important, the combination of Opdivo and Yervoy picked up FDA approval last week as a first-line treatment of advanced renal cell carcinoma, the most common form of kidney cancer. This new indication should provide a boost to sales beginning in the second quarter.

That could just be the tip of the iceberg for Opdivo. BMS has already filed for approval for the drug as a second-line treatment for small cell lung cancer and in combination with Yervoy for MSI-H or dMMR metastatic colorectal cancer. The company recently reported great results from its late-stage study of Opdivo and Yervoy in the first-line non-small cell lung cancer indication.

Granted, BMS faces a tough battle with Merck. Keytruda is a formidable rival to Opdivo and holds a cost advantage compared to the Opdivo-Yervoy combo. Other PD-1 and PD-L1 inhibitors also battle for market share. However, BMS' deal with Nektar Therapeutics to gain a lock on promising candidate NKTR-214, which increases PD-L1 expression and could make Opdivo more effective than other drugs, just might give BMS a leg up over the long run. 

Don't forget the tremendous growth prospects for Eliquis, either. The anticoagulant generated the most percentage growth for BMS in Q1, even higher than Opdivo's. BMS and partner Pfizer (NYSE:PFE) announced findings in March from a large study showing significantly lower rates of stroke and major bleeding for patients taking Eliquis than for patients taking Xarelto or Pradaxa. It wouldn't be surprising to see Eliquis open up an even larger lead over its rivals. 

Bargain buy?

Speaking of Pfizer, the big pharma company's CEO, Ian Read, reportedly stated recently that a rumored potential acquisition of BMS was off the table for now. Read was said to have stated that Pfizer wasn't interested in acquiring BMS, in part because of its partner's valuation.

The valuation comment made me scratch my head a little. BMS stock trades at less than 14 times expected earnings. Yes, that's a higher forward earnings multiple than that of Pfizer or Merck. However, when you factor in the growth prospects for BMS, I think the stock is actually a bargain compared to most big pharma stocks.

While BMS didn't deliver impressive growth in the first quarter, my view is to just give it some time. Sales for its Sustiva and hepatitis C drugs aren't too far from hitting rock bottom. After that point, these products won't be weights dragging down the company's year-over-year comparisons. That will open the door for growth produced by Opdivo and Eliquis to really shine.

There are stocks with better growth prospects than BMS, to be sure. But in my view, it's a relative bargain at current price levels. I think BMS will be a winner for long-term investors.