27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
BMO Capital Markets earlier this week downgraded shares of Bristol-Myers Squibb Co (NYSE:BMY), citing strong near-term headwinds and the lower odds of a takeout.
Near-Term Headwinds
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Analyst Alex Arfaei listed a few near-term evens he believes will likely further increase uncertainty about Bristol's IO franchise, lowering its shares by at least 2 percent:
- Probable approval of Merck & Co., Inc. (NYSE:MRK)'s Keytruda + chemo by May 10.
- ASCO abstracts on May 17 should reveal promising data for Keytruda + Incyte Corporation (NASDAQ:INCY)'s IDO and lower expectations for BMY's Opdivo + Yervoy.
- Muted Expectations concerning significant new data from Bristol at ASCO, and the conference itself likely strengthening the firm's argument that the IO market will become increasingly fragmented.
- Increased competitive pressure expected from Roche Holding Ltd. (ADR) (OTC:RHHBY)'s Tecentriq in 2L + NSCLC in the second half of 2017.
- In the second half of 2017, payers are likely to use the CM-067 results to limit the use of Opdivo + Yervoy in melanoma.
- Doubts over AstraZeneca plc (ADR) (NYSE:AZN)'s MYSTIC PFS results, expected mid-year, being better than Keytruda + chemo in KN-021G.
- Another underappreciated risk may be the unexpected decline of Bristol's $1 billion+ Baraclude franchise, which lacks exclusivity.
Low Probability Of Being Bought Out
BMO Capital Markets said it believes the probability of Bristol-Myers being bought out is low given the uncertainty about its IO franchise and macro considerations such as the U.S. tax reform. The firm also noted Pfizer Inc. (NYSE:PFE)'s management echoed its concerns regarding such a deal.
"Overall, we argue that even if we see positive resolution of the macro factors (e.g., U.S. tax reform), given Bristol's over-dependence on its IO franchise (we estimate ~50 percent of revenue by 2021 and ~70 percent of profits), and our expectations for increased uncertainty about its potential, a take-out seems unlikely because it is simply too risky," the firm concluded.
As such, BMO Capital Markets downgraded Bristol-Myers to Underperform from Market Perform, while it maintained its price target at $47.
Related Links:
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Icahn Takes Bristol-Myers Stake With M&A In Mind; Who Could Be The Acquirer?
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.