Bristol-Myers Squibb Company (BMY): what the price requires
The current priced-in claim for Bristol-Myers Squibb Company (BMY) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/BMY
Headline
| Field | Value |
|---|---|
| Ticker | BMY |
| Company | Bristol-Myers Squibb Company |
| Current price | $59.26/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 6.4% |
| Operating margin today | 23.5% |
| Margin compression implied | -17.1pp |
| Multiple paid | 13x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.
Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage (computed at the 7% minimum rate; the CAPM rate 6.4% sits below it).
Reconcile: at the x-ray's 9.3% required return this reads ~3%/yr; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -1.61σ |
| cohort percentile (of 112 peers) | 19 |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.26x | 4 | expensive |
| Earnings | 1.40x | 4 | expensive |
| Relative | 1.07x | 5 | expensive |
| Growth | 0.78x | 4 | justifies |
Families that justify the price: Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.8%); the inversion above states its own rate.
Per-Model Detail (n=17)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $96.79 | 0.61x | yes | FCF base $11.9B, growth 2% (input: historical growth), terminal g 1.8%, WACC 6.8%, 5yr projection |
| DCF Exit Multiple | Growth | $66.66 | 0.89x | yes | Exit EV/EBITDA: 42.6x / 44.6x / 46.6x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $55.52 | 1.07x | yes | P/E 24x (static sector reference · 2026-04), scenarios: 20.2x / 24.0x / 27.8x (bear / base = reference held flat / bull), EV/EBITDA 24.57x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $88.91 | 0.67x | yes | Stage 1: 20% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $38.42 | 1.54x | yes | BV/sh $9.80, ROE (TTM) 36.3%, ke 9.3% |
| Two-Stage Excess Return | Asset | $82.01 | 0.72x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $40.65 | 1.46x | yes | Rev $48.5B, growth 2% (input: historical growth; tapered), Terminal P/S: 2.1x / 2.5x / 2.9x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $42.84 | 1.38x | yes | EPS $3.57, growth 2% (input: historical EPS growth), PEG=8.34 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | $60.14 | 0.99x | yes | BV $9.80 + 5yr PV of (ROE (TTM) 36.3% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $28.06 | 2.11x | yes | √(22.5 × EPS $3.57 × BVPS $9.80) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $9.11 | 6.50x | yes | EBITDA $3.59B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $43.91 | 1.35x | yes | FCF $11908.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $40.98 | 1.45x | yes | SBC-adj FCF $11.35B (FCF $11.91B − SBC $0.56B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $115.19 | 0.51x | yes | EPS $3.57 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $94.74 | 0.63x | yes | Revenue $48.48B × sector P/S 4.0x |
| PEG Fair Value | Relative | $133.88 | 0.44x | yes | EPS $3.57 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $38.59 | 1.54x | yes | EPS $3.57 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $36.0b |
| Net debt / NOPAT (after-tax) | 3.92x |
| Net debt / operating income (pre-tax) | 3.24x |
| Interest coverage | 5.9x |
| Share count CAGR (buyback) | -1.4% |
| Burning cash | no |
Bullet Takeaways
At about $54 (as of June 27, 2026) the market pays roughly 12 times operating income, a multiple low enough that the price sits below what even a 5% per year decline in operating profit would warrant. The stock is priced for shrinkage.
The cash flow says otherwise, at least today. The static value frames bracket the price comfortably.
The reason for the discount is the patent cliff. The company depends on a few key products, the Legacy Portfolio is already declining on Revlimid and other generics, and net debt of about $36 billion, roughly 3.2 times operating income, leaves less room to absorb a revenue gap than a debt-free peer would have.
Bull Case
Measure the gap first, because it is large. At about $54 the price sits below nearly every valuation frame the engine applies. Relative Valuation lands right at the price near $55. When a profitable, cash-generative pharmaceutical trades at roughly 12 times operating income and below what even a 5% annual profit decline would justify, the market is pricing terminal erosion, not just deceleration. That is the spread the bull case exploits.
The operating reality is better than the price implies. First-quarter 2026 EPS of $1.58 beat the $1.42 consensus, and revenue of $11.49 billion beat by more than half a billion. Eliquis delivered $4.14 billion, up 16% year over year, and the 10-K notes its U.S. revenues "increased 6% in 2025, primarily due to higher demand" with international revenues up 14%. The Growth Portfolio, the products meant to carry the company past its patent cliff, reached $6.2 billion, up 12%, led by Camzyos, Breyanzi, Reblozyl, and Opdualag. Management reaffirmed full-year 2026 guidance of $46.0 to $47.5 billion in revenue and $6.05 to $6.35 in adjusted EPS, and indicated performance is tracking toward the upper end.
The dividend and the cash flow do the rest. Roughly $11.9 billion of free cash flow funds a substantial dividend and steady deleveraging while the Growth Portfolio scales. The bull thesis does not require heroic growth; the inversion only assumes the business does not decline more than modestly. If the Growth Portfolio and new launches keep offsetting the Legacy decline, the company holds its earnings flat, and a stock priced for collapse re-rates toward the cash-flow value the static models already see.
Bear Case
The disconnect between price and fundamentals is not an accident, and the qualitative reason is the one that has haunted Bristol-Myers Squibb for years: it is a company built on a small number of large drugs that lose their protection on a schedule. The 10-K states it plainly, that the company depends "on several key products for most of our" revenue, and lays out exactly how the cliff works. Generic competitors can enter once exclusivity ends, and "a competitor seeking to launch a generic substitute" needs only to "demonstrate bioequivalence" rather than rerun trials. This is the structural fragility of a legacy pharma, and the market is right to demand a discount for it.
The decline is already underway. The Legacy Portfolio fell to $5.3 billion in the first quarter, down 6%, driven by generic impacts on Revlimid, Pomalyst, and Sprycel. Revlimid in particular has been a multibillion-dollar product, and its erosion is the single biggest swing factor in the company's earnings trajectory. Eliquis, the largest product at over $4 billion a quarter, faces its own exclusivity timeline and U.S. drug-pricing pressure. The entire bull case rests on the Growth Portfolio scaling fast enough to outrun these losses, and that is a race, not a certainty. If new launches disappoint or pipeline assets fail, the revenue gap widens.
The balance sheet is the second reason the price-to-fundamentals gap may persist. Net debt is about $36 billion, roughly 3.2 times operating income, with interest coverage of 6.1 times. That is manageable for a company generating $11.9 billion of free cash flow, but it is not the fortress balance sheet of a debt-free peer, and it competes with the dividend and the pipeline for cash. The accounting also flatters return on equity to 36% only because book value per share is a thin $9.80, which is why the asset models like the Graham Number at $28 and the EV/EBITDA Relative at $9 land far below the price. The cash-flow models say the stock is cheap; the patent cliff is the reason the market refuses to believe the cash flow lasts.
Valuation
Bristol-Myers Squibb is priced as a whole company on its operating earnings, and the read is stark: at about $54 the market pays roughly 12 times company-wide operating income, low enough that the inversion describes the price as sitting below what even a 5% per year operating-profit decline would warrant. That is a bound, not a solved growth rate. The price is not underwriting growth at all; it is underwriting whether the decline stays modest.
The model spread is wide but mostly points up. The cash-flow and growth frames sit well above the price: DCF Perpetual Growth at $101, FCF Yield at $44, SBC-adjusted FCF Yield at $41, Two-Stage DDM at $89, and the Ben Graham Formula at $115. The relative frame lands at the price, with Relative Valuation near $55 on a sector-median multiple, and P/Sales Sector at $95. The asset frame is where it gets distorted: book value per share is only $9.80, so the Graham Number lands at $28 and EV/EBITDA Relative at $9, both pulled down by a thin equity base and a depressed normalized EBIT figure.
The priced-in label is within range, and the characterization is value and asset-supported rather than a pure growth bet. That fits a classic patent-cliff pharma: the cash flow is real and the static models say the stock is cheap, but the market discounts the durability of that cash flow because a few products carry it and they expire. The valuation question is therefore not about the number, it is about belief: whether the Growth Portfolio and reaffirmed guidance toward the upper end of $46 to $47.5 billion in revenue prove the cash flow durable, or whether the Legacy decline and net debt of $36 billion mean the discount is deserved.
Catalysts
First-quarter 2026 results, reported in late April, were the recent driver and they beat. EPS of $1.58 topped the $1.42 consensus and revenue of $11.49 billion came in more than half a billion above expectations. Eliquis grew 16% to $4.14 billion, the Growth Portfolio rose 12% to $6.2 billion on Camzyos, Breyanzi, Reblozyl, and Opdualag, and the Legacy Portfolio fell 6% to $5.3 billion on generic competition to Revlimid, Pomalyst, and Sprycel. Management reaffirmed full-year 2026 guidance of $46.0 to $47.5 billion in revenue and $6.05 to $6.35 in adjusted EPS, and signaled performance is tracking toward the upper end.
The defining medium-term dynamic is the race between the Growth Portfolio and the patent cliff. The market is watching whether new launches, including the schizophrenia therapy Cobenfy and the continued ramp of Camzyos and Breyanzi, can scale fast enough to offset accelerating Legacy erosion as Eliquis and other key products approach their own exclusivity milestones.
The watch items are Growth Portfolio revenue against the Legacy decline, pipeline and launch progress, U.S. drug-pricing policy and any Eliquis exclusivity developments, the pace of deleveraging against the roughly $36 billion net-debt load, and the dividend. Sources: BMY Q1 2026 results and 8-K (stocktitan.net, quiverquant.com), earnings coverage and call transcript (alphastreet.com, finance.yahoo.com, marketbeat.com); product-concentration and exclusivity language from the FY2025 10-K (accession 0000014272-26-000004).
Peer Cohorts (Per Segment, With Filing Citations)
Bristol-Myers Squibb (consolidated) (reported)
- PFE (Pfizer Inc.)
- (no filing in the citation store)
- AMGN (Amgen Inc.)
- (no filing in the citation store)
- GILD (GILEAD SCIENCES, INC.)
- (no filing in the citation store)
- NVS (Novartis AG)
- (no filing in the citation store)
- GSK (GSK plc)
- (no filing in the citation store)
- MRK (Merck & Co., Inc.)
- (no filing in the citation store)
- LLY (ELI LILLY & Co)
- (no filing in the citation store)
- ABBV (AbbVie Inc.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.