Must-Know Changes to Bristol-Myers Squibb’s Valuation
Bristol-Myers Squibb’s valuation
Bristol-Myers Squibb (BMY), a US pharmaceutical company, includes innovative products from its Cardiovascular, Immunoscience, Neuroscience, Oncology, and Virology franchises. The company’s headquarters are in New York City.
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The above chart shows revenues and earnings per share (or EPS) for BMY over the last few quarters and estimates for 3Q17. Wall Street analysts estimate EPS of $0.76 on revenues of $5,167 million for 3Q17.
PE or price-to-earnings multiples represent what one share can buy for an equity investor. As of September 27, Bristol-Myers Squibb (BMY) was trading at a forward PE multiple of ~19.9x, compared to the industry average of 15.9x. Competitors Eli Lilly and Co. (LLY), Merck & Co. (MRK), and Pfizer (PFE) are trading at forward PEs of 18.6x, 15.8x, and 13.1x, respectively.
On a capital structure–neutral and excess cash-adjusted basis, Bristol-Myers Squibb currently trades at ~16.7x, which is much higher than the industry’s average of ~11.9x. Other competitors Eli Lilly and Co. (LLY), Merck & Co. (MRK), and Pfizer (PFE) have forward EV/EBITDA multiples of 13.8x, 11.8x, and 10.7x, respectively.
As per data on September 27, Bristol-Myers’s stock value has risen 13.4% over the last 12 months. Analysts estimate that the stock price will fall 7.4% over the next 12 months. Wall Street analysts’ recommendations show a 12-month targeted price of $58.27 per share compared to the last price of $62.93 per share as of August 26. Also, out of 23 analysts covering Bristol-Myers Squibb, nine recommend a “buy,” 11 recommend a “hold,” and three recommend a “sell.” The consensus rating for Bristol-Myers Squibb is 2.48, which represents a moderate buy for value investors.
To divest company-specific risks, investors can consider ETFs like the Health Care Select Sector SPDR ETF (XLV), which invests 3.2% of its total assets in Bristol-Myers Squibb (BMY). XLV also invests 2.5% in Eli Lilly and Co. (LLY), 5.6% in Merck and Co. (MRK), and 6.4% in Pfizer (PFE).