What sparked this sizable rally in the drugmaker's shares last month? For most of the month, Bristol's stock simply drifted higher in tandem with the broader markets -- fueled by the dual prospects of an end to the trade war with China and the enactment of far more modest reforms toward branded drug pricing in the United States than those originally proposed by some Democrats.
However, Bristol's shares also got a noticeable boost from the company's better-than-expected third-quarter earnings report, which was released ahead of the opening bell on October 31. Despite slowing sales for its megablockbuster cancer immunotherapy Opdivo, Bristol still managed to top Wall Street's consensus estimates for its bottom and top lines for the three-month period.
The company outperformed expectations largely due to the stellar commercial performance of the anticoagulant Eliquis, the immunology drug Orencia, and the cancer medication Sprycel. The multiple myeloma drug Empliciti also played a key part, with its sales jumping by a healthy 51% relative to the same period a year ago.
Is Bristol's stock still a strong buy after this double-digit uptick? Bristol's long-term fortunes are now tied to the performance of the upcoming megamerger with Celgene that's slated to close before year's end. On the bright side, Celgene sports one of the deepest pipelines in the business, and Bristol didn't exactly pay top dollar to acquire this treasure trove of high-value clinical candidates.
That said, megamergers in the healthcare sector rarely produce immediate benefits for shareholders. This Bristol-Celgene marriage might turn out to be one of few exceptions to this general rule of thumb, but there are arguably far more attractive buys in the biopharma space right now.