Red-Hot Bristol-Myers Squibb Stock Has Plenty of Room to Run
BMY tends to outperform after earnings reports
Options traders and analysts have both taken a bearish stance
The shares of Bristol-Myers Squibb Co (NYSE:BMY) have been on a steady uptrend over the last several months, while boasting low implied volatility (IV). What’s more, the stock stands above the round $150 billion market-cap level, and last month broke out above chart resistance. With earnings results due out in late April, and the fact that BMY stands above all prior earnings closes in recent history after its plans to buy back 10% of its outstanding shares, now seems like a perfect opportunity to bet on the stock’s next move higher.
There is still plenty of room for upgrades among the brokerage bunch, which could lead to double-digit gains on a year-to-date and year-over-year basis. More specifically, six of the 13 analysts in question still call Bristol-Myers Squibb stock a tepid “hold.” There has also been a sharp rise in short interest, which is up roughly 105% in 2022. Should some of that pessimism start to unwind, BMY may surge higher still.
It’s also worth noting the equity sports attractively priced premiums right now. This is per BMY’s Schaeffer's Volatility Index (SVI) of 17%, which sits in the low 19th percentile of its annual range. In other words, options players are pricing in relatively low volatility expectations at the moment.
Our recommended July call has a leverage ratio of 9.8, and will double in a 9.6% pop in the underlying shares.
Subscribers to Schaeffer's Weekend Trader options recommendation service received this BMY commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.
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