Bristol-Myers gets bigger with Celgene Buy. Investors Shrug.
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Investors take the time to purchase the soon-born pharmaceutical behemoth created by the merger of
Bristol-Myers Squibb
(ticker: BMY) and
Celgene
Credit Suisse analyst Vamil Divan wrote Tuesday after extensive conversations with investors.
Divan wrote that investors see an upside in the combination, but still have many questions.
"The general theme has been that while there is likely value to have been in the name, there is no rush to get into the stock before upcoming computer readings and the end of the Celgene acquisition," Divan said.
Meanwhile, Bristol-Myers is doing its best to increase confidence in future acquisitions. On Wednesday, the company announced some of the leaders who would lead the company after the Celgene acquisition was closed. Among other shifts, the company's chief scientific officer will leave in October, The Wall Street Journal reported.
Bakhistorie . In April, Bristol-Myers Squibb shareholders approved the proposed acquisition of Celgene for $ 74 billion. The agreement is expected to close in the third quarter. Shares in Bristol-Myers Squibb are down 10.3% since the beginning of the year.
Last year, as Barron reported, Divan said he was worried about the company's ability to "integrate the agreement effectively without experiencing development or commercial disturbances." He maintained his neutral rating and $ 55 target price on the company, which still stands.
What's new. In the note this week, Divan wrote that he has been in talks with investors as he says take "wait and see approach" to the firm.
He reported that investors have "limited enthusiasm" for the great deals in Celgene drug pipeline. And he said that while investors believe management wants to make sure they beat and increase subsequent quarterly estimates, they aren't clear which will lead to an increase in the stock price.
Many investors, Divan said, say "despite the fact that the stock looks cheap … there are good reasons why the stock should trade at this level of discount to the group for now."
Looking forward to. Bristol-Myers is starting to set the stage for its merged future with the announcement on Wednesday of some of its new management team. Rupert Vessey currently president of research and early development in Celgene, will take that role in the combined company. Samit Hirawat a Novartis leader, will be the company's chief executive for global medicine development.
The Bristol-Myers share has advanced 0.1% to $ 46.69 at 11:42. Wednesday man
S&P 500
has increased 0.4%, and the Dow Jones Industrial Average has increased 0.5%.
Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com
