With Bristol-Myers Squibb (BMY ) hitting new lows and speculation swirling that it might be a takeover target, has it become a buy? Hardly, say several pros--who argue that, on fundamental and technical grounds, it's still a stock to avoid. Most analysts give Bristol a sell, hold, or neutral rating. The shares plunged from 60 on Sept. 17 to 31 on Apr. 10. Fierce marketing in the fourth quarter--leading to groaning shelves at wholesalers--and stiff rivalry from generics brought an unexpected first-quarter drop in sales. So earnings of 47 cents a share trailed analysts' 56 cents estimate. Also, safety concerns delayed Food & Drug Administration approval of its Erbitux cancer medication.

Richard Evans of Sanford C. Bernstein, who has a neutral rating on Bristol, says he's set to downgrade it to a sell once he's sure that 2002 earnings will drop to $1.30--his current estimate--from $2.67 in 2001. The market will probably assign Bristol a price-earnings ratio of only 18, he says, which puts the stock's worth at 23. And his 2003 earnings forecast of $1.51 is also worrisome, he says, as it's way below previous estimates. At $1.51, the stock is worth 27. Even a takeover possibility hasn't persuaded him to buy. With Bristol's troubles, "no company will pay a premium," he says. "So I don't expect a bidding war." Staying independent, he adds, won't be easy for Bristol, which has "negative productivity trends," falling gross margins, and an underinvestment in research--with few drugs in the pipeline. "Based on the charts, the stock is a buy only in the 20-to-22 area," says Andy Addison of Addison Investment, who uses technical analysis in valuing stocks. "It's too early to buy," he says.

By Gene G. Marcial

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