Bristol-Myers Squibb Plunges 5.5%—Is the Pharma Sector’s Cost-Cutting Storm Now Targeting BMY?

Summary
• BMY slumps 5.5% to $43.455, hitting its 52-week low of $42.96
• Sector peers like Pfizer (PFE) also retreat, with PFE down 2.33%
• Cobenfy’s Phase III failure and pharma layoffs amplify sell-off

BMY’s steep intraday decline has thrust it into the crosshairs of a broader sector correction. A confluence of BMS-specific setbacks—including a failed trial for its Alzheimer’s drug Cobenfy—and sweeping cost-cutting at pharma giants like Merck and Moderna has triggered a selloff. With the stock trading below its 30-day moving average and RSI signaling oversold territory, the move raises urgent questions about the durability of its recovery and the sector’s resilience.

Cobenfy’s Phase III Failure and Sector-Wide Cost-Cutting Spark BMY’s Sharp Decline
BMY’s 5.5% intraday plunge is a direct consequence of two compounding factors: its own clinical setbacks and a sector-wide wave of cost-cutting. The firm’s Alzheimer’s drug Cobenfy, a key hope for its neuroscience pipeline, failed to meet its primary endpoint in a Phase III trial, casting doubt on its commercial potential. Meanwhile, sector peers like Merck, Moderna, and Sanofi are restructuring, with layoffs and cost rationalization dominating headlines. This creates a dual threat—both company-specific underperformance and a broader risk-off sentiment in pharma, where investors are reassessing valuations and R&D pipelines.

Pharma Sector Bears Down as BMY Trails PFE
While the broader pharmaceutical sector is under pressure, BMY’s decline outpaces its peers. Pfizer (PFE), the sector’s largest stock, has retreated 2.33% amid its own earnings-driven volatility but remains above key support levels. BMY, however, is trading near its 52-week low and has underperformed PFE by over 300 basis points today. The divergence highlights BMY’s unique challenges: its reliance on a narrow set of high-risk, high-reward assets like Cobenfy and its exposure to a sector increasingly prioritizing efficiency over innovation.

Bearish Playbook: Puts on BMY and a Watch on PFE’s Sector Lead
• 200-day MA: $53.6979 (well below) • RSI: 38.80 (oversold) • MACD: -0.1027 (bearish) • Bollinger Bands: $45.77–$49.12 (price near lower band)

BMY’s technicals and fundamentals align for a bearish setup. Key resistance lies at $45.77 (lower Bollinger Band), with support at $42.96 (52-week low). A break below $42.96 could trigger deeper selling. Two options stand out for short-term bearish exposure:

• BMY20250808P43.5 (Put, $43.5 strike, Aug 8 expiry)
- IV: 27.82% (moderate) • Leverage: 52.25% • Delta: -0.5208 • Theta: -0.0585 • Gamma: 0.2100 • Turnover: 54,223
- This put offers high leverage and liquidity, ideal for a 5% downside scenario. A 5% move to $41.28 would yield a 112.82% payoff (max(0, $43.5 - $41.28)).

• BMY20250808P44 (Put, $44 strike, Aug 8 expiry)
- IV: 26.86% (moderate) • Leverage: 39.42% • Delta: -0.6279 • Theta: -0.0579 • Gamma: 0.2064 • Turnover: 41,158
- With a deep delta and high gamma, this contract reacts sharply to price swings. A 5% drop would see a 115.69% payoff (max(0, $44 - $41.28)).

Aggressive bears should prioritize BMY20250808P43.5 for its liquidity and leverage. If $42.96 holds, pivoting to PFE’s 2.33% decline offers a safer sector proxy.

Backtest Bristol-Myers Squibb Stock Performance
The backtest of Bristol-Myers Squibb's (BMY) performance after an intraday plunge of -5% shows mixed results over different time frames. While the 3-day win rate is 47.06%, indicating a slight majority of positive returns in the short term, the longer-term outlook is less optimistic, with a 10-day win rate of 51.96% and a 30-day win rate of 50.82%. The maximum return during the backtest period was only 0.06%, suggesting that BMY tends to recover only modestly after such significant intraday declines.

BMY’s Crucible: Will Cost-Cutting or R&D Resilience Prevail?
BMY’s collapse near its 52-week low signals a critical inflection point. While the sector’s cost-cutting narrative weighs heavily, the stock’s technicals—oversold RSI and bearish MACD—suggest further downward momentum. Investors must monitor two key triggers: a potential rebound above $45.77 (Bollinger Band) to test near-term demand or a breakdown below $42.96, which could invite deeper short-term selling. Meanwhile, Pfizer’s 2.33% decline underscores sector-wide fragility. Act now: Buy BMY20250808P43.5 for a bearish bet or pivot to PFE if the sector stabilizes.