Bristol Myers Squibb (BMY)
Salud / Farmacéutica
Branded pharmaceutical where the Growth Portfolio (Opdivo, Reblozyl, Breyanzi, Camzyos) grows +17% and almost exactly offsets the -15% generic erosion of the Legacy Portfolio (Eliquis, Revlimid), leaving the consolidated figure practically flat while the market prices in the worst of the patent cliff: the stock trades at a high-single-digit adjusted earnings multiple despite a recently raised 2026 guidance and without needing share buybacks to sustain the return.
- Price
- $67.70
- Intrinsic value (5y, base)
- $140
- Total annual return (5y)
- 18.7%
- Status (nominal)
- Very undervalued
- Margin of safety
- +45%
The essentials
- Growth Portfolio +17% in 2025 almost exactly offsets the -15% decline in the Legacy Portfolio, leaving the consolidated figure flat but hiding a genuine growth engine
- 2026 guidance raised in the July 30, 2026 press release: revenue to US$49,000-50,000 million and non-GAAP earnings per share to US$6.75-7.00, with Eliquis revised from +10-15% to +20-25%
- No share buybacks since 2024 despite an unused US$5,000 million authorization: excess cash flow prioritizes the dividend and paying down debt from the Karuna, Mirati and RayzeBio acquisitions
Intrinsic value — two valuation methods
Total return at 5 years: 18.7%/year = 15.6% appreciation + 3.1% dividend. The target price ($140) is ex-dividend; the $14 in dividends collected over 5 years are added separately.
By both methods, the value today (DCF $197 · Multiples $124) exceeds the market price ($68).
Pillars of the analysis
The verdict — today vs 5 years
Today — with margin of safety: at $68 trades ~45.6% below its value discounted to today (~$124) — the wide discount we require (≥38%, equivalent to a ~15% annual return); the risk is covered by the margin, not the rate.
At 5 years — Muy infravalorado: the target price ($140) plus dividends yield above the required average return (10%) — the business compounds.
The bridge: the return at 5 years comfortably exceeds the risk-free rate (4.5%) — and the discount reaches the required margin of safety.
Thesis
The business
Bristol Myers Squibb combines a solid growth portfolio (Growth Portfolio +17% in 2025, with Reblozyl +31%, Camzyos +77% and Breyanzi +82%) with a legacy portfolio in outright generic erosion (Revlimid -49%, Sprycel -62%). The net result is a consolidated figure that is practically flat, which hides the real engine of the business behind the headline. The recently raised 2026 guidance (revenue US$49,000-50,000 million, non-GAAP earnings per share US$6.75-7.00) confirms that the growth engine already outweighs the drag from erosion.
The valuation
It is valued on P/E over normalized adjusted earnings, with a terminal exit multiple of 15x (branded pharmaceutical band 14-22x). The 5-year value in the base scenario is $140, which at market price implies a total return of +19% annually.
The margin of safety
At a price of $68, the stock trades There is a margin of safety: the market's perception is meaningfully worse than reality.. The verdict is Very undervalued: the margin against the maximum price that sustains a 15% annual return is +14%.
What to watch
The central disconfirmer is whether the Legacy Portfolio erodes faster than modeled -in particular whether Eliquis loses volume abruptly following the loss of exclusivity in 2026-2028- without the Growth Portfolio offsetting it in time. Also watch price negotiation under the Inflation Reduction Act, which has already reached Eliquis and Pomalyst and could expand to Orencia and other products.
Educational / informational. Does not constitute investment advice.