3 Numbers That Explain Bristol Myers Squibb's Dirt Cheap Valuation
2026-09-29 09:21
•Thomas Niel •The Motley Fool
••• •• Axe Cap view
Why Bristol Myers Squibb Looks Undervalued Despite Patent Risks
Patent expirations weigh on Bristol Myers Squibb’s valuation, but growth prospects suggest upside.
Bristol Myers Squibb (BMY) trades on a price-to-earnings ratio of just 9, which is remarkably low for a big pharma stock. Investors worry about the patent cliff hitting blockbuster drugs like Eliquis by 2028, threatening earnings. Yet, the company’s newer drugs and a 15% growth in its pipeline show that BMY isn’t standing still. For South African investors, this story mainly ties back to USD/ZAR movements—if the rand weakens against the dollar, holding US pharma names like BMY gets pricier. Locally, this leans towards keeping an eye on currency volatility rather than relying on direct JSE equivalents. Patience is key; if BMY can successfully ride through the patent expirations, the market might re-rate its multiple towards the mid-teens in the next few years. The risk is that generics hit faster and harder than expected, denting profits more severely. this is just our opinion and not financial advice
Wait for a more stable sector trend and a softer rand before adding BMY exposure via USD. Avoid chasing the stock unless you can tolerate a volatile ride through the patent cliff.
- BMY
- USD/ZAR
- Faster generic competition post-2027
- Rand depreciation increasing dollar cost for local investors
6/10
Bristol Myers Squibb trades at a low P/E ratio of 9 despite a 42.5% stock surge over the past year, reflecting investor uncertainty about its ability to offset major patent expirations. However, the company's strong growth portfolio (up 15%) and new drug launches suggest successful patent cliff mitigation, potentially offering upside if 2027-2028 results exceed expectations.
Our take is based on reporting first published by The Motley Fool.