Credit Suisse’s 8 Pharmaceutical Stocks With ‘Significant’ Upside – TheStreet.com

Posted by on Aug 29th, 2015 and filed under Pharmaceutical News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

Credit Suisse’s 8 Pharmaceutical Stocks With ‘Significant’ Upside – TheStreet.com

NEW YORK (TheStreet) — Pharmaceutical stocks were not immune to the recent market sell off, which means several stocks could present buying opportunities.

Credit Suisse (CBGet Report) highlights eight stocks that have been beaten down that also have upcoming events that could drive their stock prices even higher.

“While the recent selloff has led to target prices for each of our companies suggesting significant upside, we focus on near-term catalysts that may offer provide investors with a more fundamental way to find upside,” the Aug. 27 note said.

Check out Credit Suisse’s stock picks, with ratings from TheStreet Ratings for added perspective.

Must Read: 9 Mistakes First-Time Investors Make

TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a “buy” yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a “buy” yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

BMY Chart BMY data by YCharts

1. Bristol-Myers Squibb Co. (BMYGet Report)
Credit Suisse Rating, Target Price: Outperform, $ 78
Potential Stock Upside: 28%

Upcoming Catalyst: Much of the focus on BMY has been around the Opdivo+Yervoy data in 1st line NSCLC to be presented at WCLC on Sept 7th. Our recent conversations with the company reflect continued confidence in this combination, suggesting possible upside coming out of WCLC, although the reaction will likely be impacted by other data at the conference, including additional data from Roche on atezolizumab (PD-L1) plus standard chemotherapy in the 1st line NSCLC setting. We also expect stronger uptake for Opdivo on the commercial side in 2H 2015 than what was seen in 1H given the full impact of the squamous NSCLC approval in early March and the positive data seen in the non-squamous setting since then.

TheStreet Rating: Hold, C
TheStreet Said: 
TheStreet Ratings team rates BRISTOL-MYERS SQUIBB CO as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

“We rate BRISTOL-MYERS SQUIBB CO (BMY) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company’s strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.”

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 7.0%. Since the same quarter one year prior, revenues slightly increased by 7.0%. This growth in revenue does not appear to have trickled down to the company’s bottom line, displayed by a decline in earnings per share.
  • The current debt-to-equity ratio, 0.49, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.08, which illustrates the ability to avoid short-term cash problems.
  • The gross profit margin for BRISTOL-MYERS SQUIBB CO is currently very high, coming in at 80.33%. Regardless of BMY’s high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BMY’s net profit margin of -3.12% significantly underperformed when compared to the industry average.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Pharmaceuticals industry and the overall market, BRISTOL-MYERS SQUIBB CO’s return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $ 71.00 million or 93.27% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm’s growth rate is much lower.

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