Bristol Myers Squibb Company (BMY) is a New York-based global biopharmaceutical company. In November 2019, the company acquired Celgene for a total value of $80.3 billion.

We are looking for Bristol Myers to return to and then sustain overall revenue growth, both from resilience in their key franchises (Opdivo, Revlimid and Eliquis) and from new products currently in their pipeline.

We also want to see the company execute on its $2.5 billion cost-cutting program which will likely remain intact with the recently completed MyoKardia acquisition.

Bristol Myers’s recent earnings report was encouraging. Adjusted for the Celgene acquisition, sales rose 10% and earnings increased 20%, with both results above consensus estimates.

Bristol raised its full year 2021 earnings guidance by 2%, to a midpoint of $7.45 and reaffirmed its longer-term expectations for low-mid single digit revenue growth rate and low-mid 40s non-GAAP operating margin.

The company expects to generate between $45 billion and $50 billion in cash flow over the three years of 2021-2023. This sum is equivalent to 35% of the company’s $136 billion market value (our apologies: the previous market cap data was incorrect). The balance sheet is solid. Overall, the story remains intact.

Berkshire Hathaway (BRK-B) — Warren Buffett and crew — is the 8th largest shareholder, at 1.5%, and the likely 3rd largest active shareholder behind indexers like Vanguard, BlackRock, State Street, and Fidelity/Geode Capital (unclear as to what extent these two affiliated firms are active or passive).

We also see that Dodge & Cox is the 11th largest shareholder, with a 1.2% stake. We have a high regard for this value investment manager’s thorough research and long-term holding period.

We remain patient with BMY shares. The stock trades at a low 8.3x estimated 2021 earnings of $7.48 (up 1 cent from last week). On 2022 estimated earnings of $8.11 (also up 1 cent from last week), the shares trade for 7.6x. Either we are completely wrong about the company’s fundamental strength, or the market must eventually recognize Bristol’s earning power.

We believe the earning power, low valuation and 3.2% dividend yield that is well-covered by enormous free cash flow makes a compelling story. We rate the stock a "strong buy".