Tuesday’s IBD 50 Stocks To Watch pick, pharmaceutical leader Bristol Myers Squibb (BMY), broke out above a new buy point amid the sharp stock market sell-off. The stock’s relative strength line is approaching new highs Tuesday, indicating strong potential as a new market leader.
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Bristol Myers Squibb stock rallied as much as 2.5% to 64.27 Tuesday before trimming gains by the close. Shares closed just above the proper buy point after the day’s breakout attempt.
New York City-based Bristol Myers Squibb develops pharmaceuticals for various diseases, including cancer. Last year, the company closed on its $74 billion acquisition of biotech giant Celgene. After acquiring Celgene, the pharmaceutical company’s biggest products became cancer treatments Revlimid and Opdivo, and a blood thinner called Eliquis.
IBD 50 Stocks To Watch: Bristol Myers Squibb
In the first quarter, Revlimid generated nearly $2.92 billion in sales. Behind that, Eliquis brought in $2.64 billion in sales, an increase of 37%.
In the most recent quarter — reported May 7 — adjusted earnings per share and sales soared 56% and 82%, respectively, vs. the year-ago period, according to IBD’s database. The earnings and sales results easily topped analyst estimates. For the full year, analysts expect the company’s earnings to rise 32% to $6.18 per share and 20% in 2021.
Bristol Myers ranks No. 15 in the IBD 50 list. (The IBD 50 is a list of leading growth stocks with strong relative price strength and top-notch fundamentals.)
The stock boasts a 98 out of a best-possible 99 EPS Rating and a superb A SMR Rating, according to IBD Stock Checkup. The Earnings Per Share Rating tracks a company’s earnings strength. The SMR Rating analyzes a company’s sales, margins and return on equity.
Industry Group’s Top-Ranked Stock
IBD Stock Checkup also shows that BMY stock has a highest-possible 99 IBD Composite Rating, making it the No. 1-ranked stock in the ethical drugs industry. Investors can use the Composite Rating to easily measure a stock’s main fundamental, technical and fund ownership metrics vs. other stocks.
Other top-ranked stocks in the industry are Zoetis (ZTS) and Dow Jones stock Merck (MRK). Zoetis is adding a handle to a V-shaped cup base, making the correct buy point 132.34.
Meanwhile, Merck was trying to retake its 50-day line Tuesday. The Dow Jones drug leader is shaping a cup with handle with a 84.77 buy point. But the stock’s RS line is now far from prior highs.
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Drug Leader In Buy Range
Bristol Myers is breaking out above a cup with handle’s 63.28 buy point, according to MarketSmith chart analysis. Volume is lighter than ideal for a breakout, but did measure above average. The volume on the breakout day should increase at least 40% above average to indicate strong institutional buying.
Bullishly, the stock’s relative strength line is still near new highs after hitting new highs in April. The RS line measures a stock’s price performance vs. the general market.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the stock market.
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