We will purchase 300 shares of Bristol-Myers Squibb stock at approximately $58 per share. Jim Cramer’s charitable trust will hold 900 shares of BMY stock after Wednesday’s trade, increasing its weighting from 1% to about 1.5%. In the absence of any real news, shares of drugmaker Bristol-Myers Squibb have fallen about 3% in the past two days. The stock hit a new 52-week high on Monday. We are taking advantage of the decline to further expand our recently initiated positions. On November 25, we removed Bristol-Myers Squibb from our bullpen watch list. Bristol-Myers Squibb is in the midst of a transformation under Chief Executive Chris Boerner. He is dealing with one of the biggest patent cliffs in the pharmaceutical industry, with key products such as blood clot prevention drug Eliquis and lung cancer treatment Opdivo set to expire and face generic competition in the coming years. Losing patent protection will cause the company’s total sales to decline through 2029. That’s why Bristol-Myers Squibb currently trades at about 8 times consensus 2025 EPS estimates. What the market currently underestimates is Cobenfy’s sales potential. The drug was acquired when Bristol-Myers Squibb acquired Karuna Therapeutics for $14 billion in December. The deal is one of many multibillion-dollar acquisitions Bristol-Myers has made to supplement its pipeline. BMY 5Y mountain Bristol-Myers Squibb In September 2019, the FDA approved Cobenfy to treat schizophrenia in adults. It is the first new drug to treat the disease in more than 30 years. According to analysts at JPMorgan Chase, schizophrenia is a market worth more than $20 billion in the United States. We think Bristol-Myers Squibb will dominate this space after AbbVie’s competing drugs recently failed in two mid-stage trials. AbbVie’s failure provides a clear path for Cobenfy to win in the space. JPMorgan currently expects Cobenfy to hit $5 billion in annual sales by 2030, but analysts said they wouldn’t be surprised to see peak sales of more than $10 billion if the drug is approved for other indications. Considering Bristol-Myers Squibb is expected to generate about $47 billion in sales this year, adding potentially such a large product is a big deal. As Cobenfy sales increase in the coming years, Bristol-Myers Squibb’s price-to-earnings ratio should readjust upward, easing investor concerns about the company’s post-patent cliff growth. Finally, we like the way Bristol-Myers Squibb pays a high dividend while it waits. The stock’s current annual dividend yield is about 4.15%. (Jim Cramer’s Charitable Trust Buys BMY. For a full list of stocks, see here.) As a subscriber to Jim Cramer’s CNBC Investing Club, you’ll get Jim Cramer Receive trade alerts before making a trade. Jim waits 45 minutes after sending a trade alert before buying or selling stocks in his charitable trust portfolio. If Jim talked about a stock on CNBC TV, he would wait 72 hours after issuing a trade alert before executing the trade. The investment club information above is subject to our Terms and Conditions and Privacy Policy and our Disclaimer. No fiduciary duty or obligation is created or created by any information you receive in connection with the Investment Club. No specific results or profits are guaranteed.
