Bristol-Myers Squibb (NYSE:BMY) set a new 52-week high this
week after a federal judge
upheld a patent on Plavix - the company's best selling drug
with over $938 million in first quarter sales. Many traders positioned
themselves for further upside with more than 244,000 call options (mostly out of
the money) trading hands yesterday on a base stock move of over four percent.
The move indicates the increasing number of BMY bulls in the short
term.
The drug company was also lifted by speculation that it could
become the subject of a takeover by larger drug companies like Sanofi-Aventis.
Now that the legal issues surrounding Bristol-Myers' #1 selling drug is cleared
up, many investors believe the likelihood of such a deal has increased. Analysts
peg the value of any deal in the mid to high 30s per share; however,
wide-reaching partnerships with many companies in the industry may cause
complications.
So, is this a stock worth buying? Well, clearly many
investors and analysts are very bullish on the company while a giant legal cloud
over its best drug has been lifted. Moreover, there is speculation that the
company could receive buyout bids in the future. The company also has strong
earnings and cash flows that have led to a strong bull trend in the stock price
for more than a year. Combined, these factors have led to many trend followers
along with opportunistic investors to jump onboard. Whether or not there is
significant upside from here remains to be seen; however, we know that the
options activity and past trends are all pointing up!
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