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Comparing BMY’s and LLY’s Valuation

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Valuation comparison

Bristol-Myers Squibb’s (BMY) EV (enterprise value) is $97.2 billion, and its EV-to-revenue ratio is 4.7. The stock is trading at a forward PE (price-to-earnings) ratio of 13.8 and a PEG (price-to-earnings-to-growth) ratio of 1.4. Its price-to-sales ratio is 4.1, and its price-to-book ratio is 7.7. The company’s operating margin is 25.8%, and it has generated an ROA (return on assets) of 9.9% and an ROE (return on equity) of 6.9%.

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In comparison, Eli Lilly’s (LLY) EV is $88.4 billion, and its EV-to-revenue ratio is 3.9. The stock is trading at a forward PE ratio of 15.1, and its PEG ratio is 1.4. Eli Lilly’s price-to-sales ratio is 3.7, and its price-to-book ratio is 7.3. Its operating margin is 21.6%, and it has generated an ROA of 7.4%, which suggests Bristol-Myers Squibb has employed its assets more efficiently.

Analysts’ recommendations

Of the 23 analysts covering Bristol-Myers Squibb in April, nine recommended “buy” or a higher rating, 11 recommended “hold,” and three recommended “sell.” The mean rating for the stock is 2.5, and its target price is $61.35, which implies a ~19% upside based on its April 24 closing price of $51.58.

In comparison, of the 22 analysts covering Eli Lilly, 13 recommended “buy” or a higher rating. Analysts’ mean rating for the stock, 2.2, implies they favor Eli Lilly over Bristol-Myers Squibb. Eli Lilly’s target price of $90.70 implies a 13% upside based on its April 24 closing price of $80.09, meaning Bristol-Myers Squibb has a higher upside potential. In the next part of this series, we’ll compare Novartis and Novo Nordisk.

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