We recently published the list of 11 stocks Jim Cramer is bearish on. Bristol-Myers Squibb Co (NYSE:BMY) ranks 2nd in the list. Click to see the full list of 11 stocks Cramer is bearish on. In this article we will take a deeper look at BMY and find out whether Cramer’s thesis holds any weight.
Jim Cramer in a latest program said the “bulls” want the economy to slow down, they want rate cuts as well as a strong demand so that “their companies” won’t have to worry about the yield curve and macroeconomic situation. Cramer highlighted that all of this is confusing, as it’s not possible to have a weaker economy and yet see companies make a lot of money. Cramer also pointed to the latest data showing slowing manufacturing activity. The Institute for Supply Management’s manufacturing purchasing managers index fell to 48.7 in May from 49.2 in April, while analysts were expecting the index to jump to 49.5. Cramer said that the economic activity in the manufacturing sector contracted for the 18th time in the last 19 months. Cramer said the new orders contraction in May was a “little over frightening.”
Talking about the energy sector, Cramer said that he’d buy oil and gas stocks as the economy would sooner or later begin to get back to normal. Cramer also said that it’s surprising to see many retailers, including Dick’s Sporting Goods, GAP and Best Buy, performing exceptionally well. Cramer also talked about a Wall Street analyst who “double upgraded” Best Buy shares, saying the company “might be the biggest beneficiary” of the AI PCs boom. Cramer said he agrees with this thesis.
For this article we watched several latest programs of Jim Cramer and picked 11 stocks he’s bearish on. With each stock we have mentioned hedge fund sentiment. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Bristol-Myers Squibb Co (NYSE:BMY)
Number of Hedge Fund Investors: 57
A caller recently asked Jim Cramer about his thoughts on Bristol-Myers Squibb Co (NYSE:BMY), referring to Bristol-Myers Squibb Co’s (NYSE:BMY) almost 6% dividend yield. Cramer said that if you want to get “paid to wait,” Pfizer is a better choice because with Bristol-Myers Squibb Co (NYSE:BMY) “it’s going to be a long wait.”
Bristol-Myers Squibb Co (NYSE:BMY) shares have lost about 36% over the past one year. The stock is getting clobbered amid fears of sales declines following patent expirations. Bristol-Myers Squibb Co’s (NYSE:BMY) cancer drug Revlimid has seen severe sales declines after it went off-patent in 2022. Bristol-Myers Squibb Co’s (NYSE:BMY) anti-stroke drug Eliquis is going off-patent in 2026. To offset the potential declines, Bristol-Myers Squibb Co (NYSE:BMY) is going on a buying spree, acquiring smaller companies to expand its portfolio. Bristol-Myers Squibb Co (NYSE:BMY) bought Karuna Therapeutics (neuroscience drugs), RayzeBio, Inc.( adiopharmaceutical therapeutics) and Mirati Therapeutics (oncology drugs).
Earlier this month, Bristol-Myers Squibb Co (NYSE:BMY) jumped after the company said the FDA-authorized cancer therapy Krazati (adagrasib) reached its main goal in a late-stage trial for lung cancer.
Some analysts believe Bristol-Myers Squibb Co (NYSE:BMY) could use AI for drug discovery to expand its portfolio. According to data from McKinsey, generative AI could produce $60 billion to $110 billion annually in value for the pharmaceutical industry. However, our research shows there are many pure-play AI stocks currently trading at attractive valuations. While we acknowledge the potential of the biotech and pharma industry companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Based on its 2025 EPS estimate of 6.91, the stock is trading at a forward P/E of just 6, much lower than the industry median of 19. Its P/S ratio stands at 1.85, compared to the industry average of 3.61. However, over the next five years unless Bristol-Myers Squibb Co (NYSE:BMY) could expand its portfolio rapidly and do something about its patents, Bristol-Myers Squibb Co (NYSE:BMY) is expected to report a negative growth rate of -4.45%. That’s why Cramer said it’d take a long time before this investment could pay off.
Ariel Global Fund stated the following regarding Bristol-Myers Squibb Company (NYSE:BMY) in its fourth quarter 2023 investor letter:
“Biopharmaceutical company, Bristol-Myers Squibb Company (NYSE:BMY), also underperformed in the quarter on mixed earnings results and a reduction in guidance due to a delay across several new product launches. Although the company’s mid- to long-term targets remain intact, management expects a transition period before the company returns to top-tier growth. In our view, many of the new drugs represent either the first-in-class (the first molecule approved by the FDA) or best efficacy opportunities and believe the new product portfolio should outperform expectations over time. Meanwhile, management remains bullish on its maturing pipeline and reaffirmed it will continue to seek business development through bolt-on acquisitions and licensing deals.”
Bristol-Myers Squibb Co (NYSE:BMY) ranks 2nd in Insider Monkey’s list of the Jim Cramer Says You Should Not Buy These 11 Stocks.
If you are looking for an AI stock that is as promising as Microsoft but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.