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Why Bristol-Myers Squibb Stock Crashed in April

By George Budwell - May 9, 2018 at 10:20AM

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The company's stock hasn't been this cheap in years. Time to buy?

What happened

Shares of the big pharma behemoth Bristol-Myers Squibb (BMY -0.53%) turned in one of their worst months on record in April. Specifically, the drugmaker's shares lost a hefty 17.5% of their value last month, according to S&P Global Market Intelligence.

Bristol's shares were clobbered in April for three reasons:

  1. It was a rough month for nearly all biopharmaceutical stocks, thanks to President Trump's controversial trade war with China.
  2. Pfizer's (PFE 0.55%) management team noted halfway through the month that Bristol was not a top acquisition target due to the company's current valuation.
  3. Bristol's Q1 sales narrowly missed Wall Street's consensus estimate toward the end of the month. 
The word Value spelled out with wooden blocks.

Image source: Getty Images.

So what

Despite posting stellar revenue growth over the past few years due to the breakout success for its cancer immunotherapy Opdivo, as well as its blood thinner Eliquis, Bristol's shares are now trading near their 52-week lows after this double-digit drop in April. 

Now what

Bristol's former top shelf valuation apparently reflected Wall Street's strong belief that Pfizer would indeed make a tender offer sometime soon. Pfizer, after all, is now flush with cash after the newly minted tax legislation, and this pairing makes a lot of sense for a variety of reasons

Just because Pfizer isn't interested, though, doesn't necessarily mean that Bristol won't get taken out this year. Gilead Sciences (GILD 0.43%), for instance, could very well emerge as a suitor due to the relatively slow start for its cellular immunotherapy endeavor and accelerating declines in its hep C franchise. Gilead also has the financial capacity necessary to take on such a large deal. 

Apart from the possibility of a buyout, Bristol looks like a great pick up at these rock bottom prices simply for its strong organic growth. Opdivo is continuing to rack up new indications at record pace and Eliquis' sales are also showing no signs of slowing down. As such, bargain hunters may want to take advantage of this dip to grab some shares soon.


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Stocks Mentioned

Bristol Myers Squibb Company Stock Quote
Bristol Myers Squibb Company
$78.28 (-0.53%) $0.42
Pfizer Inc. Stock Quote
Pfizer Inc.
$50.94 (0.55%) $0.28
Gilead Sciences, Inc. Stock Quote
Gilead Sciences, Inc.
$62.48 (0.43%) $0.27

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