BMY Flashing Bull Signal Ahead of Earnings

BMY options can be had for a bargain at the moment

Deputy Editor
Feb 1, 2021 at 2:22 PM
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The shares of Bristol-Myers Squibb Co (NYSE:BMY) are up 1.6% at $62.39 at last check, just ahead of the pharmaceutical name's fourth-quarter earnings, due out before the open on Thursday, Feb. 4. In addition, BMY is up 5.4% in the last six months, but has recently experienced a minor pullback on the charts. Investors need not fret, however, as the security's latest pullback has it near a historically bullish trendline, which could push the stock higher in the near future.

More specifically, BMY just came within one standard deviation of its 320-day moving average, after spending a few months above this trendline. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, five similar signals have occurred during the past three years. Without fail, the security enjoyed positive returns one month after each signal, averaging a 7.8% gain. From its current perch, a move of similar magnitude would put BMY at $67.26 -- its highest level in a year.

BMY Chart February 1

Concerning the upcoming earnings report, Bristol-Myers stock has moved higher after five of its last eight earnings reports, including a 5% rise in July of 2019. On average, BMY experienced a post-earnings swing of 2.2% over the past two years, regardless of direction. This time around, the options market is pricing in a bigger-than-usual move of 4.1%. 

Lastly, now seems like the right time to weigh in on BMY options. The security's Schaeffer's Volatility Index (SVI) of 31% sits in the low 18th percentile of all other annual readings, meaning the stock sports attractively priced premiums at the moment.


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