It’s easy to find stocks that are lagging broader stocks, even in a bull market like the one we’re in now. It’s harder to find distressed stocks that still seem worth buying and holding for a while. Some companies are doomed to poor financial results and stock market performance virtually in perpetuity.
Fortunately, Bristol Myers Squibb (NYSE:BMY) And Pfizer (NYSE:PFE), two drugmakers that are failing to keep pace with broader stocks, arguably do not belong to this group. Even though these companies have faced recent challenges, there are excellent reasons to invest in them for the long term. Let’s dig deeper to see why.
1. Bristol Myers Squibb
Bristol Myers’ first-quarter revenue of $11.9 billion increased 5% year-over-year. This is a decent, although not particularly impressive, performance for a pharmaceutical giant. However, it’s worth pointing out that the company’s year-over-year revenue growth has been negative for several quarters.
Bristol Myers has faced significant patent breaches, but it appears to be turning a corner, thanks in part to its portfolio of newer drugs. However, the drugmaker is not out of the woods yet. The cancer drug Opdivo is one of the company’s best-selling products, but it will no longer be protected by patent by 2028. Bristol Myers should also be able to resolve this problem.
Its new portfolio includes drugs approved since 2019 that could generate around $25 billion in revenue by 2030. Most of them are expected to see sales increase through the 2030s. Additionally, Bristol Myers has a plan to counter the decline in sales of Opdivo after it reached the patent cliff. The company is developing a subcutaneous version of the drug that it says could meet 65% to 75% of Opdivo’s indications.
Bristol Myers is also expected to get approval for even more new products. Its pipeline includes 55 compounds. So the drugmaker should do just fine in the long run, although it may need some patience before it fully rebounds. One more reason to buy the stock: Bristol Myers offers a pretty decent dividend program. Its forward yield stands at 5.46% and its payouts have increased by approximately 46% over the past five years.
Despite the market’s underperformance of late, dividend investors should love this stock.
2. Pfizer
Pfizer’s revenue is falling off a cliff. In the first quarter, the company’s revenue of $14.9 billion was down 20% year-over-year.
However, the drugmaker’s situation is a little different from that of Bristol Myers. Pfizer’s Comirnaty and Paxlovid are not short of patent protection, but as the pandemic recedes, neither product is generating nearly as much sales as in 2021 and 2022 or even last year. This is why Pfizer stock has failed to keep pace over the past two years.
Here’s the good news. Pfizer’s coronavirus-related work has been a net positive for the company. The drugmaker’s relatively modest investment in developing COVID-19 products has paid off many times over. Pfizer became the first company in the history of the biopharmaceutical industry to generate $100 billion in annual revenue, money that allowed it to splurge on acquisitions and significantly improve its pipeline .
It’s already paying off. Pfizer launched several new products last year, including Abrysvo, a respiratory syncytial virus vaccine, and Litfulo, a treatment for an autoimmune disease called alopecia areata, among others. But Pfizer is far from finished. The company currently has 113 programs in progress.
The company is well positioned to bounce back from its recent poor stock market performance and generate strong returns over the long term. Pfizer is also a decent dividend stock. Its payouts have increased just under 17% over the past five years and have a forward yield of 6.04%. Going against the market by buying this stock and holding it would be a great move.
Should you invest $1,000 in Bristol Myers Squibb right now?
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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Bristol Myers Squibb and Pfizer. The Motley Fool has a disclosure policy.
2 Beaten Stocks to Buy and Hold for 10 Years was originally published by The Motley Fool
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