We are buying 300 shares of Bristol-Myers Squibb at approximately $58 each. Following Wednesday's trade, Jim Cramer's Charitable Trust will own 900 shares of BMY, increasing its weighting to about 1.5% from 1%. Shares of pharmaceutical maker Bristol-Myers have fallen about 3% over the past two days in the absence of any real news. The stock hit a 52-week high on Monday. We are using the decline to deepen this recently initiated position. We called up Bristol-Myers from our Bullpen watch list on November 25th. Here's what's happening at the company and why we own it. Bristol-Myers is in the midst of a transition under the leadership of CEO Chris Boerner. It is experiencing one of the biggest patent cliffs in the pharmaceutical industry, with key products such as blood clot prevention drug Eliquis and lung cancer therapy Opdivo set to lose their patents and face generic competition in the coming years. The loss of patent protection will cause the company's total sales to decline until 2029. The market already understands this dynamic well. That's why Bristol-Myers stock currently trades at about 8 times the consensus earnings per share estimate for 2025. What the market is currently undervaluing is Cobenfy's sales potential. This drug was acquired last December when Bristol-Myers bought Karuna Therapeutics for $14 billion. This deal was one of many multi-million dollar acquisitions Bristol Myers made to replenish its portfolio. BMY 5Y mountain Bristol-Myers Squibb 5 years In September, the FDA approved Cobenfy to treat schizophrenia in adults. It is the first novel medication for this disorder in more than 30 years. Schizophrenia is a more than $20 billion market in the United States, according to JPMorgan analysts. We believe Bristol-Myers will dominate this space after AbbVie's competing drug recently failed in two mid-stage trials. AbbVie's failure leaves Cobenfy a clear path to victory in this field. JPMorgan currently estimates Cobenfy's annual sales of $5 billion by 2030, but analysts said they would not be surprised to see peak sales in the range of more than $10 billion if the drug receives approval for additional indications. Adding such a potentially big product to the fold is a big deal considering Bristol-Myers is expected to generate about $47 billion in sales this year. Bristol-Myers' price-earnings multiple should rise again as Cobenfy's sales increase in the coming years, easing investor concerns about the company's growth precipice after the patents. Lastly, we like how Bristol-Myers pays a sizable dividend while we wait. The stock currently has an annual dividend yield of around 4.15%. (Jim Cramer's Charitable Trust is long BMY. See here for a full list of stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable fund's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER. NO FIDUCIARY OBLIGATION OR DUTY EXISTS OR IS CREATED BY VIRTUE OF THE RECEIPT OF ANY INFORMATION PROVIDED IN RELATION TO THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR BENEFITS ARE GUARANTEED.
