Today’s write-up focuses on Bristol-Myers Squibb (BMY), which currently appears in the SIA U.S. Healthcare Sector Index Report at position 69 of 104, placing it in the unfavoured zone at this time. Bristol-Myers Squibb is a major pharmaceutical company formed in 1989 through the merger of Bristol-Myers and Squibb Corporation. It is known for several blockbuster medications, particularly blood thinners and cancer immunotherapy.
BMY also resides in the Drugs category, which has shown notable recent strength in the SIA Market Sector Report. The sector now sits at position 3 of 31, up 9 spots over the past month and 23 spots over the quarter. The attached SIA Drug Sector chart analysis shows the price breaking above former resistance at the 71,025 level, with the price moving toward resistance levels at 84,882 and its all-time sector high at 90,078, underscoring its increasing relative strength. To the downside, support is at its 3-box reversal of 73,895 and, below that, the previous breakout at 69,633.
BMY currently holds an SMAX score of 8 out of 10 with a standard deviation of 7.03 per cent. However, it is underperforming relative to its healthcare sector peers, which aligns with its beta of 0.56 and supports its role as a defensive option in uncertain market conditions. Over the past month, BMY has moved up 13 positions, and it has gained 7 positions over the quarter within the SIA U.S. Healthcare Sector Index Report. The attached Point and Figure chart indicates that since 2018, the stock has largely traded sideways in a range between $34 and $71. The price is approaching resistance at $52.69 and its long term downtrend line, while the sector as a whole has already surpassed its initial resistance. A confirmed move above $52.69 would open the path to the next resistance level at $61.74. On the downside, two clear support levels are visible at its initial three box reversal of $47.73, followed by further support at $44.97.
For roughly a decade, BMY along with the broader Drugs sector may have been viewed as relatively uninteresting due to its prolonged trading range. However, the sector’s recent positive performance may signal an early shift in sentiment as investors look toward new opportunities. It is important to note several fundamental risks with Bristol-Myers Squibb, a significant one being future patent expirations on key medications along with the potential for failed trials. As exclusivity ends and more competition emerges, revenues may face pressure in the years ahead.
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