Bristol-Myers Squibb stock forecast after announcing $15 billion buyback

on Dec 16, 2021
  • Bristol-Myers Squibb shares on Thursday extended this week's gain after surging 2.5%.
  • The stock is now up more than 10% this week.
  • Bristol-Myers recently announced a stock buyback of $15 billion.

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On Monday, Bristol-Myers Squibb Co. (NYSE:BMY) shares gained 2.5%, extending this week’s gains to over 10%. The company recently announced a share buyback program worth $15 billion. The company also raised its quarterly dividend by more than 10% to $0.54 per share.

Bristol-Myers approved an additional share repurchase program of $15 billion to the previously approved $200 million, for a total of $15.2 billion. Its quarterly dividend raise now reflects a 3.48% forward annual yield based on the prevailing stock price.

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Board chair and CEO Giovanni Caforio said Bristol-Myers expects a significant cash flow of $45 billion to $50 billion between 2021 and 2023, adding that investment in business development remains a priority.

Speaking during the repurchase program and dividend announcement, Caforio said:

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We remain committed to maintaining a strong investment-grade credit rating and reducing our debt.

Is it too late to buy the stock?

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From an investment perspective, Bristol-Myers shares trade at an attractive forward P/E ratio of 7.76, making the stock a compelling option for bargain hunters.

On the other hand, analysts expect its earnings per share to decline by nearly 300% this year, before rising at an average annual rate of 5.97% over the next five years, as compared to an annual decline of 44.40% in the previous five.

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Therefore, long-term growth investors may also express an interest in the multinational pharmaceutical company.

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Source – TradingView

Technically, Bristol-Myers shares seem to be trading within an ascending channel formation in the intraday chart. As a result, the stock has now rallied into overbought conditions, creating an opportunity for a technical pullback.

Therefore, investors could target potential pullbacks at about $59.90, or lower at $57.56, while $64.64 and $66.75 are crucial resistance zones.

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