This featured recommendation—a healthcare firm with a leading position in oncology—reported far better than expected quarterly results and raised its projections for the year, notes Genia Turanova in Leeb Income Performance.

Bristol-Myers Squibb (BMY) saw sales rise 7% to $4.16 billion, about $400 million more than consensus. Revenue would have risen 16%, but international sales were hurt by the strong dollar.

Bristol-Myers owns Opdivo, a newer cancer treatment, already approved for treatment of several types of cancer (advanced squamous lung cancer and metastatic melanoma) and in studies for others.

In July, for instance, Opdivo won European approval to treat a form of lung cancer and, in addition, was found to benefit advanced kidney cancer patients.

Clinical trials showed that patients with the squamous form of non-small cell lung cancer taking Opdivo had almost twice the survival rate at one year as patients using standard chemotherapy.

Opdivo is poised to become a very important drug for Bristol-Myers, expected to account for about a quarter of the company’s revenues by 2019; projected sales of the drug in 2019 could exceed $5 billion.

In the second quarter, Opdivo accounted for $122 million in revenues, more than three times the quarter-ago number. For the full year, it’s likely to account for about $650 million or even more in sales.

Bristol-Myers isn’t just about oncology: the company reported that the FDA designated its experimental HIV drug BMS-663068 as a breakthrough treatment.

The drug is for use with other antiretroviral drugs in adults who have developed resistance to several other types of HIV treatments and is currently in late-stage clinical trials.

The shares, because of the higher expected growth, have typically been more expensive than those of its peers and trade at more than 30 times expected next year earnings. We remain buyers.

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