Bristol Myers Squibb stock (NYSE: BMY) has risen by 7% this year, outperforming the S&P 500 which has fallen by 1%. BMS’s robust Q4 performance has contributed to its positive momentum. Although new U.S. tariffs on Canada, Mexico, and China are putting pressure on markets, investors are shifting toward defensive positions amid economic uncertainty. Our analysis on market crash risk right now provides more insight into how tariffs are affecting the broader markets.
In spite of its recent strength, BMY stock is still down 9% over a longer period beginning in early 2023, significantly underperforming the S&P 500 index, up 50%. This decline is mainly due to:
- a 5% increase in the company’s revenue from $46.2 billion in 2022 to $48.3 billion now;
- a 6% decrease in total shares outstanding to 2.0 billion; more than offset by:
- an 18% drop in the P/S ratio, now at 2.5x compared to 3.0x in 2022
We examine these factors in the sections below. Although BMY stock has underperformed recently, if you prefer a smoother ride with potential upside compared to a single stock, consider the High-Quality portfolio, which has outperformed the S&P and delivered >91% returns since inception.
Bridging the Gap: From Revlimid to Camzyos
Bristol Myers Squibb’s revenue is challenged by declining sales of legacy drugs such as Revlimid. Nevertheless, the impressive performance of Eliquis, which generated over $13 billion in sales last year, serves as a counterbalance. Although Eliquis sales are expected to grow in the near term, biosimilar competition is looming as its market exclusivity expires in 2028. BMS anticipates that its new cardiovascular drug, Camzyos, will offset the eventual decline in Eliquis sales. Additionally, BMS expects that newer drugs, including Sotyktu and Opdualag, will each exceed $1 billion in sales by 2026. To further drive growth, BMS has pursued strategic acquisitions by acquiring Mirati Therapeutics, RayzeBio, and Karuna Therapeutics. These moves have expanded BMS’s pipeline to over 50 compounds, including the recently FDA-approved schizophrenia drug, Cobenfy, which has a potential peak sales estimate of over $7 billion.
Recent Share Buyback Trend
Since 2022, Bristol Myers Squibb has lowered its outstanding shares from 2.15 billion to 2.03 billion through $13 billion in share repurchases. Although the company still has $5 billion authorized for buybacks as of December 31, 2024, no repurchases occurred in 2024.
Valuation Pressures Amid Revenue Transition
BMS is currently facing valuation pressure even though its revenues have increased. This is due to several factors, chiefly the declining sales of established blockbuster drugs and the anticipated generic competition for Eliquis. While its new drug portfolio shows promising growth, BMS forecasts a 6% revenue decline for the current year, and we expect this downward trend to continue into 2026. As a result, investors have applied a lower valuation multiple to the stock.
Currently, at around $60 per share, BMS stock is trading at 2.5 times its trailing revenues, which is slightly below its five-year average price-to-sales (P/S) ratio of 2.6. According to our analysis, Bristol Myers Squibb’s valuation is estimated to be around $61 per share, closely matching the current market price.
Even though new drug approvals present potential upside, the near-term financial outlook is primarily affected by the revenue impact from declining legacy drug sales. This short-term challenge appears to be overshadowing the long-term growth prospects of the company’s emerging pharmaceutical pipeline.
As BMY stock navigates lower sales and valuation, explore the potential of the High-Quality Portfolio, a curated list of 30 stocks that has consistently delivered superior returns compared to the S&P 500 over the past four years.
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