TipRanks Smart Value #33: Undervalued Dose
1
Dear Investors,
Dear Investors,
Welcome to the 33rd edition of our recently launched TipRanks Smart Value Newsletter!
1
This Week’s Top Value Pick: Bristol-Myers Squibb (BMY)
Bristol-Myers Squibb (BMY) is a U.S.-based global biopharmaceutical company focused on discovering, developing, and delivering innovative medicines for patients battling serious diseases. The company operates as a single segment, engaged in the research, development, manufacturing, and commercialization of pharmaceuticals across various therapeutic areas, including oncology, cardiovascular, immunology, and neuroscience.
1
Biopharma Reborn
Bristol-Myers Squibb traces its origins to the 1989 merger of E.R. Squibb & Sons and Bristol-Myers Company, which created a global pharmaceutical leader with a diversified healthcare portfolio spanning prescription drugs, consumer health, and nutritional products. During the 1990s and early 2000s, the company sharpened its focus on innovative pharmaceuticals, building franchises in oncology and cardiovascular medicine with blockbuster drugs such as Plavix, Taxol, and Pravachol.
By the late 2000s, BMY redefined itself under the “BioPharma” model, combining the scientific agility of a biotech with the scale and resources of a global pharmaceutical company. This strategy marked a deliberate pivot toward high-value specialty medicines, paving the way for the company’s modern growth trajectory.
Over the past decade, Bristol-Myers Squibb has executed a mix of transformational and targeted acquisitions, alongside selective divestitures, to broaden its pipeline across oncology, cardiovascular, immunology, neuroscience, and radiopharmaceuticals. In 2019, BMY completed its largest-ever deal by acquiring Celgene, gaining a portfolio of high-performing cancer and immune system therapies, including innovative cell-based treatments. The deal required the divestiture of its psoriasis drug Otezla to Amgen to satisfy regulatory conditions. The following year, BMY acquired MyoKardia, gaining a first-in-class treatment for a rare heart condition that causes thickening of the heart muscle – further reinforcing its leadership in cardiovascular care. Expansion continued in 2022 with the acquisition of Turning Point Therapeutics, which added a promising precision cancer drug designed to target genetic mutations more effectively.
In 2023, the acquisition of Mirati Therapeutics strengthened BMY’s cancer franchise with a next-generation lung and colorectal cancer therapy, while the purchase of RayzeBio expanded its reach into radiopharmaceuticals, a fast-growing field that uses targeted radiation to destroy tumors. The company continued to diversify in 2024 with the acquisition of Karuna Therapeutics, gaining access to innovative schizophrenia medicine and advancing its neuroscience ambitions.
In 2025, Bristol-Myers acquired 2seventy bio, securing full U.S. rights to a groundbreaking multiple myeloma cell therapy, and later announced plans to buy Orbital Therapeutics for $1.5 billion to enhance its capabilities in RNA-based and cell therapy technologies.
In total, BMY has committed over $100 billion to acquisitions from 2019 through 2025, transforming its portfolio and positioning it for growth beyond legacy products. These strategic moves have been complemented by restructuring initiatives to streamline operations, reflecting a clear shift toward innovation-led, specialty biopharmaceuticals focused on sustainable long-term earnings growth.
1
Specialty Strength
Bristol-Myers Squibb generates most of its revenue from prescription drugs in oncology, cardiovascular, immunology, and neuroscience. Its portfolio combines established blockbuster brands with a growing pipeline of next-generation therapies, creating a diversified and resilient revenue base.
The business centers on high-margin specialty medicines that generate stable recurring revenue. Established blockbusters like Opdivo (oncology) and Eliquis (cardiology) anchor earnings, while newer launches such as Reblozyl, Camzyos, and Cobenfy are driving the next phase of growth. By emphasizing biologic and specialty drugs, BMY sustains pricing power, limits exposure to generics, and supports long-term operating leverage. Its expanding portfolio of drugs reflects its strategic focus on oncology, hematology, cardiovascular, immunology, and neuroscience.
A key strength lies in BMY’s research and development engine, supported by a global network of scientific teams and strategic partnerships. The company invests heavily to advance its pipeline across cancer, autoimmune diseases, and neurological disorders, often supplementing internal innovation with targeted acquisitions. Recent deals have expanded its reach into precision oncology, neuroscience, and radiopharmaceuticals, creating multiple avenues for durable growth.
The company also benefits from strong geographic and operational diversification. While the U.S. remains its largest market with around 70% of revenue, the company maintains a significant international presence and a robust supply chain that enables efficient scaling of new products. Restructuring initiatives since 2023 have streamlined R&D, manufacturing, and commercial operations, enhancing productivity and cost efficiency.
This model positions Bristol-Myers Squibb for sustained revenue growth and solid free cash flow generation. As new medicines gain traction and patent headwinds ease, BMY’s innovation-driven structure provides a strong foundation for long-term financial resilience.
1
Resilient Pipeline
Bristol-Myers Squibb continues to advance its transformation with a pipeline of late-stage drugs. The company now has 14 key programs in oncology, immunology, cardiovascular, and neuroscience, highlighting its focus on therapeutic areas with high unmet medical needs. Among its most promising candidates are milvexian, a potential blockbuster therapy aimed at preventing heart-related conditions; admilparant, designed to treat lung fibrosis; and iberdomide, which could represent a major breakthrough in the treatment of multiple myeloma. While some studies have experienced setbacks, management emphasized that these are isolated to specific programs and do not affect the broader pipeline. As such, BMY remains committed to prioritizing its resources toward assets with the strongest scientific and commercial potential, ensuring a balanced approach to innovation and execution.
In addition to internal R&D progress, business expansion remains a cornerstone of BMY’s growth strategy. The company continues to strengthen its portfolio through targeted collaborations and partnerships that complement its scientific expertise. For instance, its alliance with BioNTech aims to develop BNT327, a next-generation cancer therapy that could further solidify BMY’s leadership in immuno-oncology. Likewise, partnerships with Philochem to explore novel radiopharmaceuticals and with Bain Capital’s NewCo to advance early-stage immunology programs demonstrate the company’s dual-track approach of driving innovation both organically and through external scientific partnerships.
BMY highlighted solid progress across its new product launches, particularly Cobenfy and Camzyos, which are emerging as key growth drivers. Cobenfy, a next-generation schizophrenia treatment, remains in the early stages of commercialization and initially faced challenges as physicians transitioned from older therapies. However, momentum is building as prescription trends improve, hospital adoption expands, and the company invests in marketing and sales to deepen market reach. Management remains optimistic that, with increasing physician familiarity and potential new indications, Cobenfy could evolve into a multibillion-dollar franchise.
Camzyos, used to treat cardiovascular diseases, continues to deliver strong results, supported by rising global demand and wider physician adoption. Executives noted that the drug faces no major competitive threat from rival therapies, and recent updates to safety program requirements are simplifying its prescribing process, which should further boost uptake. This momentum underscores BMY’s ability to build high-margin franchises that offset patent expirations and support long-term revenue resilience.
The company is taking proactive steps to navigate U.S. drug pricing reforms and patent-related headwinds through a series of affordability and access initiatives. Recently, the company and its partner Pfizer launched a direct-to-patient program for the cardiology drug Eliquis, offering discounts of more than 40% to uninsured and underinsured patients. Management noted that the initiative supports the government’s broader goal of reducing intermediaries in the pharmaceutical supply chain and improving patient outcomes. Building on this approach, BMY announced that beginning in January 2026, its psoriasis treatment Sotyktu will be available through the new BMS Patient Connect platform at over 80% less than its current list price. These efforts underscore the company’s commitment to patient access and affordability.
Looking ahead, BMY plans to continue balancing growth investments with financial discipline. The company’s ongoing cost-saving initiative, expected to generate $2 billion in savings by 2027, will help fund new drug development, acquisitions, and shareholder returns without compromising margins. Management expects profitability to gradually strengthen as recently launched, higher-margin products contribute a larger share of total revenue. Although Eliquis is slated to face generic competition by 2028, BMY believes that the expansion of newer products, such as Cobenfy and Camzyos, along with continued operational discipline, will help sustain steady margins.
1
Earnings Reset
Over the past three years, Bristol‑Myers Squibb’s revenues have shown modest growth, rising at a compound annual rate of 0.4%, while earnings declined by 6.3%. This reflects the company’s ongoing transition: older drugs losing exclusivity have pressured near-term growth and profitability, even as heavy investments in new oncology and cardiovascular treatments aim to drive stronger margins and earnings over the long term.
In the second quarter of 2025, BMY reported total revenue of $12.3 billion, up 1% year-over-year, exceeding consensus estimates. Strong demand for key growth brands such as Eliquis and Opdivo offset declines in legacy products. Gross margin remained healthy at 73%, and operating expenses fell $260 million year-over-year, reflecting ongoing productivity initiatives. Adjusted EPS was $1.46, down 29% from a year ago but above Street estimates of $1.09. The year-over-year decline was largely due to a one-time $1.5 billion R&D charge related to the BioNTech partnership and continued pressure of patent expirations from older drugs.
Performance across BMY’s core therapies highlights its shift toward a more diversified portfolio. Opdivo grew 7% to $2.6 billion, supported by strong uptake in new cancer indications and the U.S. launch of Qvantig, which contributed $30 million and is expected to drive mid- to high-single-digit growth in combination with Opdivo. In hematology, Reblozyl saw strong demand for anemia treatment, while Breyanzi more than doubled to $344 million on expanded use in lymphoma. Cardiovascular therapies also performed strongly, with Camzyos up 86% and Eliquis rising 6%, aided by a new direct-to-patient discount program with Pfizer. Emerging therapies, including Sotyktu in immunology and Cobenfy in neuroscience, are gaining traction, although management noted some doctors are still adjusting to prescribing these newer treatments.
The company generated $3.9 billion in operating cash flow, ending the quarter with $13.9 billion in cash and equivalents. Total liquidity, including marketable securities, stood at $13.95 billion. BMY reaffirmed its plan to reduce debt by $10 billion by the first half of 2026. Total debt was $49 billion, with $4.7 billion in short-term obligations and $44.5 billion in long-term borrowings, translating into a net debt position of $35.2 billion, down from $38.5 billion at year-end 2024. Though the company’s debt-to-EBITDA ratio of 3.38x remains above the sector median due to past acquisitions and ongoing investments, its strong cash generation and disciplined capital management support its solid “A2” and “A” credit ratings from Moody’s and S&P, respectively.
Looking ahead to FY25, management raised revenue guidance to $47 billion at the midpoint, up from $46.3 billion, and adjusted EPS guidance to $6.50 at the midpoint, down slightly from $6.85. The company narrowed its EPS guidance to reflect the inclusion of a significant non-cash charge of approximately $0.57 per share related to the Acquired In-Process Research & Development (IPRD) charge tied to the BioNTech strategic partnership. Gross margins are expected to remain near 72% and operating margins around 37% for 2025, supported by a favorable product mix and ongoing cost discipline.
1
Value Prescription
Bristol-Myers Squibb has established a strong history of returning capital to shareholders through a combination of dividends and share buybacks. The company currently pays a quarterly dividend of $0.62 per share, which annualizes to $2.48 and represents a yield of roughly 5.67%, which is more than triple the healthcare sector average of 1.68%. This reflects over 17 consecutive years of dividend increases, underscoring management’s commitment to delivering a reliable income stream while maintaining financial flexibility. Over the past decade, BMY has grown its dividend at a compound annual rate of 5.51%, distributing approximately 37% of adjusted earnings to shareholders.
In December 2023, the company’s board approved a $3 billion extension to its existing $5 billion buyback program. Although some repurchases occurred in 2024, they were relatively small and were entirely suspended this year, as BMY doubled down on its commitment to capital discipline and debt reduction. However, with approximately $5 billion of available buyback capacity as of June 30, 2025, management demonstrated openness to returning cash through share repurchases when market conditions are favorable.
From a valuation perspective, BMY currently appears attractively priced relative to both historical averages and industry peers. The stock trades more than 25% below its historical averages on key measures such as trailing and forward P/E, trailing and forward EV/EBITDA, and price-to-cash-flow, while its forward price-to-cash-flow is about 9% below historical levels.
Compared with peers like Merck, Gilead Sciences, Johnson & Johnson, and Novartis, BMY sits at the lower end of the valuation range across trailing and forward P/E, forward EV/EBITDA, price-to-book, and price-to-cash-flow metrics. These metrics suggest that BMY shares may offer a relative bargain, providing exposure to a diversified portfolio with strong cash generation and a robust pipeline, while leaving potential upside if the company successfully executes on its growth initiatives and portfolio expansion. Moreover, BMY’s dividend yield stands meaningfully higher than most of its large-cap pharma peers, offering investors a generous income stream that’s not fully reflected in its share price. This attractive yield, combined with a depressed valuation, enhances its appeal as a classic value opportunity where investors are compensated while waiting for the company’s long-term catalysts to unfold.
Consensus estimates indicate roughly 17% upside from current levels, with some projections exceeding 49%, while discounted cash flow analysis (DCF) suggests the stock is trading approximately 67% below its intrinsic value. BMY’s solid fundamentals and promising pipeline, combined with its attractive valuation, provide a favorable entry point for those seeking high-quality exposure to healthcare equities.
1
Investing Takeaway
Bristol Myers Squibb’s current market position presents a compelling value opportunity for long-term investors. Despite near-term headwinds from patent expirations and R&D charges, the company’s durable portfolio, expanding pipeline, and disciplined capital allocation create a foundation for recovery and renewed growth. Its steady dividend track record, strong cash generation, and continued investment in high-margin specialty medicines offer both income stability and upside potential. With shares trading well below historical valuation levels, investor sentiment appears overly cautious relative to the company’s underlying fundamentals and strategic progress. As BMY’s next-generation therapies gain traction and operational efficiencies strengthen margins, the stock’s combination of resilience, innovation, and income appeal positions it as an attractive, undervalued play within the broader healthcare sector.
