AbbVie vs. Bristol Myers Squibb: Which Pharmaceutical Stock is a Better Buy?
March 10, 2021 at 11:00 AM EST
With the greatest health crisis in more than 100 years, pharmaceutical stocks have been the talk of Wall Street. But which ones are the best to invest in now? Patrick Ryan compares AbbVie (ABBV) to Bristol Myers Squibb (BMY) to see which is a better buy.
Pharmaceutical stocks have been front and center during the pandemic. The race to develop a coronavirus vaccine has certainly presented an opportunity for investors to make money. However, there are opportunities in this space that extend beyond the ongoing pandemic.
If you are like most investors, your head spins when the subject of pharmaceutical stocks is raised because there are too many industry players to keep track of. Fret not, as I have whittled down the pack to the best of the best.
AbbVie (ABBV) and Bristol Myers Squibb (BMY) are two of the most intriguing pharmaceutical stocks. Let's take a closer look at these pharmaceutical powerhouses to determine which is more deserving of a place in your portfolio.
ABBV has an overall POWR Rating of B, indicating it is a Buy. The stock also has an A grade in the Value component of the POWR Ratings. Click here to find out how ABBV fares in terms of the Growth, Stability, and Momentum components.
Of the 240 publicly traded companies in the Medical - Pharmaceuticals industry, ABBV is ranked 15th. Click here to find other tops stocks in that industry. Analysts have established an average price target of $112.05 for ABBV, indicating a potential 4% upside.
ABBV has a forward P/E ratio of a mere 8.57, meaning the stock is likely undervalued at its current price. Add in the fact that ABBV has a 4.87% dividend, and there is even more reason to be bullish.
If you are still on the fence about whether ABBV is worthy of your money, consider that Cathie Wood of ARK investing fame has established a stake in the company. Wood is bullish on ABBV's genomics pipeline with several experimental cancer drugs in development.
Bristol Myers Squibb
BMY has a POWR Ratings grade of C, yet the stock has B grades in the Value and Growth components. You can find out how BMY fares in the remaining components by clicking here. BMY is currently ranked 33rd in the Medical - Pharmaceuticals industry.
Analysts believe BMY is underpriced, setting an average price target of $75.13 for the stock. If BMY rises to this level, it will have increased by nearly 24%. Analysts' high target price for the stock is $86. Of the 19 analysts who have issued recommendations for BMY, seven consider it a Strong Buy, seven consider it a Buy, five consider it a Hold, and none view it as a Sell or Strong Sell.
BMY has a low forward P/E ratio of 8.14, indicating it is likely priced below where it should be. However, BMY is a mere $6 below its 52-week high of $67.16. It is also important to note BMY pays an attractive dividend of 3.24%.
BMY has amassed an impressive $4 billion of cash, some of which will be used to pay some of its debt. The more prudent approach might be to reinvest the cash in its pipeline to improve its competitive advantage all the more.
Analysts project average yearly earnings growth over 20% across the next half-decade. This growth will be powered by BMY's Eliquis product for blood thinning and its Yervoy and Opdivo immunotherapies for cancer patients. Additional products moving through the BMY pipeline include Zeposia, a multiple sclerosis drug, and Reblozyl, a drug designed to help those saddled with anemia.
The Better Buy
ABBV is the winner. With an overall POWR Rating grade of B, an A grade in the Value component, and an industry rank of 15th, this is a stud of a stock.
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ABBV shares were trading at $107.77 per share on Wednesday afternoon, up $0.98 (+0.92%). Year-to-date, ABBV has gained 1.76%, versus a 4.34% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management.AbbVie vs. Bristol Myers Squibb: Which Pharmaceutical Stock is a Better Buy? appeared first on StockNews.com