Big upside for this big pharma player

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Good morning Mr. Schizas,

I have enjoyed your columns over the years and your time on television.

I have owned Bristol-Myers for several years, and it is doing quite well, what do you think of the stock and where it is going?

Thank you very much,

Frank

Hey Frank,

Thanks for your support over such a long period.

Bristol-Myers Squibb Co. has provided you with substantial capital gains and generous dividends since you have owned it. Management has been aggressively fighting generic competition for some of its franchise compounds through their research at the lab bench and with strategic acquisitions. The name of the game in the pharmaceutical space is keeping the pipeline full of products and it appears that BMY is meeting that challenge.

An examination of the charts will help inform the analysis of your investment.

The three-year chart illustrates the aggressive move higher that started in late December of 2012 as the company was granted approval for a new blood thinner by the FDA. That bit of good news was followed by a fourth-quarter beat in late January and a penny increase in the dividend in February. All those developments have added $10.00 to the share price in four months for a better than 30 per cent gain. In December of 2012 the RSI and MACD were both signalling that buyers were taking control of the market.

The six-month chart provides a close-up of the pattern of base building followed by an advance that has played out twice since December. Worth noting is that the MACD and the RSI are both indicating that there is more to come. BMY will report first-quarter 2013 results on April 25, which is the next flex point on the calendar. When I examined the charts going back to 1983 I didn't see much resistance to hold this one back. In summary, you found yourself a running horse – don't shoot it!

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it to lschizas@globeandmail.com.