Bristol-Myers versus AbbVie stock: Expert picks a side

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AbbVie Inc (NYSE: ABBV) is a better long-term investment than peer Bristol-Myers Squibb Co (NYSE: BMY) even though the latter just secured FDA approval for its Psoriasis pill, says Mohit Bansal. He’s a Managing Director at Wells Fargo.

AbbVie stock has upside to $200

Bansal recommends that you invest in AbbVie as it has upside to $200 a share. His price objective translates to more than a 40% increase from here. Explaining his bull case on CNBC’s “Closing Bell”, he said:

We like AbbVie that’s facing a patent cliff next year, however, beyond that, it’s a stock that’s trading at twelve to thirteen times the trough year EPS and this company could be up for a transformation in the longer term.

In July, the biopharmaceutical firm reported better-than-expected earnings for the fiscal second quarter. Its revenue, though, was below estimates.

Wall Street currently has a consensus “overweight” rating on the AbbVie stock as well.

Why else is AbbVie a better pick?

AbbVie is more attractive in terms of valuation as well. It’s trading at a price-to-earnings multiple of 20 times versus 24 times for Bristol-Myers; and has a higher dividend yield of nearly 4.0%.

The regulatory approval for Bristol-Myers’ “Sotyktu” (Deucravacitinib), Bansal added, was not sufficient to build a bull case for “BMY”.

The label asks for blood work before prescribing this medicine, which is going to be a bit of a hurdle. Then the treatment that is already out there is very efficacious. So, it’s a big deal, it’s a positive news. But not quite the bull case scenario.

He currently rates the multinational at “hold”.  

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