Bristol-Myers Squibb’s Valuation in December 2017



Bristol-Myers Squibb’s valuation

Headquartered in New York City, pharmaceutical giant Bristol-Myers Squibb (BMY) offers various cardiovascular, immunoscience, neuroscience, oncology, and virology products. The company reported EPS (earnings per share) of $0.75 on revenue of $5.3 billion in 3Q17. Let’s take a look at some of its valuation multiples.

Forward price-to-earnings multiple

The above chart compares revenue and EPS (earnings per share) for Bristol-Myers Squibb over the last few quarters. PE (price-to-earnings) multiples represent what one share can buy for an equity investor. On December 14, 2017, Bristol-Myers Squibb had a forward PE multiple of ~19.4x, whereas the industry average was 14.0x. Competitors Eli Lilly (LLY), Merck (MRK), and Johnson & Johnson (JNJ) have multiples of 18.8x, 14.0x, and 18.1x, respectively.

Enterprise value multiple

On December 14, 2017, Bristol-Myers Squibb’s EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple was ~16.3x, much higher than the industry average of ~10.8x. Peers Eli Lilly (LLY), Merck (MRK), and Johnson & Johnson (JNJ) were trading at forward EV-to-EBITDA multiples of 14.3x, 10.6x, and 13.2x, respectively. Notably, the iShares Global Healthcare ETF (IXJ) has a 2.2% exposure to Bristol-Myers Squibb, a 1.8% exposure to Eli Lilly, a 3.3% exposure to Merck, and an 8.2% exposure to Johnson & Johnson.

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