Bristol-Myers shares have fallen more than 26 percent in the past two months. On Aug. 5, the stock plunged 16 percent, wiping out $20 billion in value in a single session on news that its flagship oncology drug, Opdivo, failed to meet its primary endpoint in a clinical trial for advanced non-small cell lung cancer.
The news set back the company's most important drug and prompted analyst downgrades and estimate cuts.
"To me, at these levels, it just screams value, even as you might have to wait a while for this investment to pay off," Cramer said.
Opdivo is already available commercially and helps patients' immune systems' T-cells fight cancer more effectively. The drug has grown dramatically, as it generated nearly $1 billion in sales in 2015 and more than $1.5 billion for the first 6 months of 2016.
As soon as investors heard that the drug failed to meet its primary endpoint, Wall Street turned its back on the whole franchise, assuming that people would switch to a competitor like Merck's Keytruda.
However, Cramer said the drug did not meet goals because Bristol-Myers set the bar too high. When it designed the clinical trial, it included patients who expressed a specific protein by more than 5 percent — a very low level.
Why circle back to the stock now?
Cramer's charitable trust bought the stock because Opdivo estimates have now gone from too high to too low, now that most analysts have stripped the non-small lung cancer numbers from estimates.
Additionally, the company has another non-small cell lung cancer trial to pair Opdivo with another of its drugs. If that trial goes well, estimates will need to be raised.
"Let's not act like Bristol-Myers is some one-drug wonder biotech firm," Cramer said.
It has a host of drugs that treat a variety of diseases, and sports a robust drug pipeline even after taking Opdivo estimate cuts into account.
However, it is important for investors to keep in mind that Bristol-Myers is now a value investment that requires a long-term time horizon, Cramer said. It could take a year or two for the story to play out. Short term, it could be choppy and the stock could go lower. Cramer recommended pouncing on weakness, especially as there could be some heading into the election.
"In this negative environment for the drug industry, I think Bristol-Myers has finally come down to the point where it is simply too attractive to ignore as a long-term investment," Cramer said.