Bristol-Myers Grows in the Wrong Places

Bristol-Myers Squibb (NYS: BMY) recorded another strong quarter, but the revenue growth was at least partially in areas that aren't sustainable.

Sales were up 14% year over year, but 4% of that was due to a weaker dollar which increased foreign sales. Currency movements are something Bristol-Myers has no control over and the dollar continuing to drop is (hopefully) not sustainable.

U.S. sales of Plavix, the company's top-selling drug that it sells with Sanofi (NYS: SNY) , increased 17% over the year-ago quarter. But Plavix will begin to see generic competition in May of next year. Bristol-Myers benefits from increased revenue now, but the higher sales are just raising the cliff from which Bristol-Myers will fall from.

Despite those concerns, the rest of the earnings report looked pretty good. Bristol-Myers' new melanoma treatment, Yervoy, is off to an excellent start, bringing in $95 million during its first quarter on the market.

Sticking with the new drugs that will help deaden the blow from the loss of Plavix, Bristol-Myers and Pfizer (NYS: PFE) plan to submit a marketing application for their anticlotting drug Eliquis later this year.

Despite some recent wins in the clinic and regulatory approvals, Bristol-Myers is sticking with its guidance of at least $1.95 per share in 2013 after Plavix begins to fall. Assuming it hits the minimum, Bristol-Myers is trading at 14.8 times 2013 earnings. I have a hard time seeing investors assigning a much higher premium to the early post-Plavix comeback, so if shares are going to move substantially higher, investors will need to be convinced that Bristol-Myers can make more than $1.95 per share in 2013.

That, or be content with the 4.6% dividend yield until the growth starts happening -- whenever that might be. The yield is substantially higher than its peers', including Pfizer, Johnson & Johnson (NYS: JNJ) , and Abbott Labs (NYS: ABT) .

And if that's not your cup of tea, Motley Fool analysts have a free report that offers up 13 more high-yielding stocks you can buy today.

At the time thisarticle was published Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Abbott Laboratories and Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of Pfizer, Johnson & Johnson, and Abbott Laboratories. Motley Fool newsletter services have recommended creating a diagonal call position in Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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