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Stock Analyst Update

The Week in Stocks: Bristol's CEO Gets the Ax and That's Okay

Plus, melodrama in HP's boardroom, Ford tries another way forward, and more.

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Drugmaker Bristol-Myers Squibb (BMY) gave its embattled CEO, Peter Dolan, the heave-ho on Tuesday. The move followed a number of well-publicized missteps, including financial restatements, costly government investigations, dilutive acquisitions, and a bungled defense of the company's best-selling drug, Plavix, from generic competition. While Morningstar analyst Tom D'Amore applauded the board's decision to remove Dolan, he also cautioned that Dolan's permanent successor will face significant challenges given that a number of the company's key drugs are slated to go off-patent. As such, D'Amore is leaving his fair value estimate for the company unchanged.
 Full Analyst Report: Bristol-Myers Squibb

Maintaining HP's Stewardship Grade Despite Boardroom Shenanigans
Morningstar analyst Mark Lanyon is leaving his Stewardship Grade for Hewlett-Packard (HPQ) unchanged despite revelations that the company's chairwoman orchestrated a potentially illegal effort to identify the source of recent leaks to the media. Though chairwoman Patricia Dunn's decision to delve into the personal calls of her fellow directors was certainly odious (and ultimately cost her her job), Lanyon doesn't see how the drama affects the board's stewardship of investor capital.   
 Full Analyst Report: Hewlett-Packard 

Ford Tries Another Way Forward
Amid falling sales and ballooning losses, Ford (F) announced Friday that it is accelerating and expanding its Way Forward restructuring plan. The new approach comes less than eight months after the company unveiled the first version of this much-anticipated turnaround program. While the new plan calls for more-aggressive cost cuts and faster product introductions, Morningstar analyst John Novak believes industry conditions will continue to grow more difficult for Ford. As such, he's maintaining his fair value estimate and reiterating his speculative risk rating for the company while he examines the plan's details.
 Full Analyst Report: Ford

Canadian Telco Likely to Jack Up Dividend Payments
Canadian telecom operator Telus (TU) announced earlier this week that it would convert into an income trust. An income trust is a Canadian tax vehicle, similar to REITs in the U.S., that shifts taxes away from a corporation's earnings and onto unitholders, who pay taxes on the firm's distributions. This structure effectively allows for higher payout rates. Morningstar analyst Allan Nichols expects Telus will increase its distribution from the current C$1.10 to C$3.90-C$4.10.  Nichols believes that the change is likely to be approved by shareholders and, thus, expects to increase his fair value estimate for the stock.
 Full Analyst Report: Telus

Jeffrey Ptak does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.