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Why the selloff in Bristol-Myers is just beginning

Talking Numbers

Ouch!

Shares of Bristol-Myers Squibb dropped more than 6 percent Thursday after BMO Capital downgraded the drug maker to “market perform” from “outperform.”

The firm said new data about Bristol’s Nivo+Yervoy cancer treatment created uncertainty about its future, and negated their prior optimism.

(Read: Bristol-Myers slumps on cancer drug study data)

However, BMO noted things could brighten up for Bristol-Myers in the coming months. “We could get more constructive on the name in October/November ahead of Nivo mono Rx data in NSCLC [non-small cell lung cancer],” the firm wrote in an analyst note.

So is this a short-term selloff, or signs of long-term problems?

Rich Ross of Auerbach Grayson said the charts are painting a clear picture. Sell.

“This stock is a tale of two tops and clearly this is the worst of times for Bristol-Myers,” Ross said. “When we look at the stock longer term, we see it goes from bad to worse.”

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Why Bristol-Myers Squibb could hit $35 per share.

And Ross is predicting a sharp move down to $35 dollars per share. “We’ve accelerated in such a fashion and now that I see that bearish double top at the tail end of this five-year bull run. It set the stock up for a fast move down.”

(Watch: ASCO abstracts cause move in pharma stocks)

Andrew Burkly, managing director at Oppenheimer & Co. also sees signs for concern in Bristol-Myers Squibb.

“The problem with this company is how expensive it is,” said Burkly. “We don’t think it’s particularly interesting to buy here.”

Check out the video for today’s full discussion on CNBC “Street Signs.”

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