Like Bristol Myers Squibb (BMY)? Here’s Why You Should Take a Look at THIS Stock

Bristol Myers Squibb (NYSE: BMY) is a household name as far as pharma stocks go. The $119 billion heavyweight has an incredibly diverse portfolio spanning oncology, immunology, and cardiovascular treatments — and an equally impressive pipeline.

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BMY is a juggernaut, and the fundamentals of the stock are quite impressive. Our in-house rating system evaluates roughly 4,600 stocks through a framework of 115 factors every single day. Right now, Bristol Myers Squibb shares rank in the top 6% of the equities that we track.

Here’s the thing, though — that gives it a B rating according to our Zen Ratings system. That’s equivalent to a Buy rating; and stocks with this distinction have provided an average annual return of 19.88% since the early 2000s. This is far above the S&P 500’s average — but as you might expect, a B rating isn’t the best possible grade.

In contrast, stocks with an A rating — those that rank in the top 5% overall, have provided an average annual return of 32.52%. That’s quite the gap.

Right now, the General Drug Manufacturers industry is on a roll. It has an Industry Rating of A, and it’s the 3rd highest-rated industry out of 145 at the moment. This is definitely a space that should interest you. And here’s the kicker — BMY is the 2nd highest-rated stock in that industry.

So what’s the number 1 rated stock in the industry? 

Well, I’m glad you asked. It’s Gilead Sciences (NASDAQ: GILD), a $172 billion business that specializes in antiviral, oncology, and cell therapy treatments. GILD, unlike BMY, has a Zen Rating of A — it ranks in the top 3% of the stocks that we track.

Now let’s take a look at why the data swings in favor of Gilead Sciences. 

While the earnings of the two businesses are expected to grow at roughly the same rate, analysts forecast that BMY’s revenue will decline by 4.6% on a yearly basis. In contrast, analysts expect GILD’s revenue to grow by 5.32% per year. Over the past 3 years, GILD has grown revenue by almost 43% — for BMY, the figure is closer to 35%. When it comes to our Growth Component Grade rating, which takes into account 22 different metrics, BMY ranks in the top 33% of the stocks that we track — while GILD ranks in the top 30%.

What about Value? Both of the stocks earn A grades in that category — but only GILD is trading below its fair-value price based on discounted cash flow (DCF) modeling. Bristol Myers Squibb shares rank in the 96th percentile in this category; equivalent to or better than 96% of stocks, or, in other words, in the top 4%. Gilead Sciences shares, however, rank in the top 3%.

Two points in GILD’s favor. The stocks carry identical Momentum scores, so there’s no clear winner on that front. However, when it comes to Financials, the gap is clear. BMY’s profit margin stands at 14.6%, while the debt-to-equity ratio is 3.87. For GILD, profit margins are 28.9%, while the D/E ratio is 1.6. In this category, Bristol Myers Squibb is in the top 11% — while Gilead Sciences is in the top 4%.

One area where BMY does come out on top is Safety, where it scores in the top 4% compared to GILD’s top 6%. But the overall picture is undeniable — if we’re looking at all the fundamentals at once, Gilead Sciences shares have a clear edge.

To boot, Wall Street agrees. Bristol Myers Squibb is a consensus Buy, with an average price target that implies a 5.23% upside. Gilead Sciences, however, is a consensus Strong Buy, with an average price target that implies an 11.93% upside.

BMY is by no means a bad stock. In fact, it’s a great stock — but GILD is better. Slightly, perhaps, but better. It has also lost some 4.26% in value in the past 30 days, while BMY has stayed relatively flat — so there’s an appreciable dip that you can take advantage of.

Lastly, that dip could soon be erased, as there’s a catalyst that’s coming soon. GILD will release its next earnings report on April 23 — that’s Thursday next week. They’ve beaten earnings estimates back-to-back for the past 2 years — and there’s no reason to doubt that the streak will end any time soon.

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