Bristol-Myers Squibb Company (BMY)

Conclusion

Bristol-Myers Squibb is a US biopharmaceutical company that discovers, makes and sells medicines in oncology, hematology, immunology, cardiovascular and neuroscience, with Opdivo, Eliquis and Revlimid among its named products. On 2026-11-09 the share price was 62.14 USD, giving a market capitalisation of 127.0 billion USD and an enterprise value of 159.2 billion USD.

The verdict is fair. The price-to-earnings ratio is 13.7x against a median of 21.1x, and enterprise value to EBITDA is 10.5x against a median of 13.1x. The discounted cash flow gives 72.36 USD per share at a discount rate of 8.87%, and the fair value from historical multiples is 80.88 USD. The fair value band runs from 61.30 to 91.95 USD with a midpoint of 76.62 USD, a margin of safety of 23.3% at the current price. The reverse DCF implies growth of 1.2% a year, against revenue growth of 2.5% a year over five years and free cash flow per share growth of 1.3%.

The strongest numbers are a return on invested capital of 17.7% against a weighted average cost of capital of 7.5%, a free cash flow conversion of 1.00 over the last twelve months, and a Piotroski score of 8 out of 9. The weakest are net debt to EBITDA of 2.13x, a 90-day cut of 7.4% to the current-year earnings estimate, and five-year revenue growth of 2.5% a year. A further fall in estimates or a rise in leverage would weaken the case.

Financial health

Financial strength is yellow: the current ratio of 1.59 and the interest coverage of 7.9x are neutral to good, but net debt to EBITDA of 2.13x is only neutral and debt to equity of 1.91 is high. The quick ratio is 1.24. The Altman Z-score is 2.70, in the grey zone; the model was designed mainly for manufacturing firms, so it is only a rough guide for a drugmaker. Insolvency risk: low, about 0.6% by the estimate of the Ohlson model, based on balance sheet figures from 2025-12-31. Debt has fallen by 4.4% a year over five years. The company does not report a debt maturity schedule, so refinancing risk cannot be checked here.

Earnings quality

Earnings quality is green: the Piotroski score is 8 of 9, the Beneish M-score of -2.74 points to an unlikely manipulation, and free cash flow conversion is 1.00 over the last twelve months and 3.42 over five years. The accrual ratio is -0.08, which means cash generation is ahead of reported profit. Stock-based compensation is 1.1% of revenue, and free cash flow after it is 8.73 billion USD. The share count has fallen by 2.0% a year over five years. The company beat earnings estimates in all 8 of the last quarters, with an average surprise of 16.2%. Estimates for the current year were cut over 90 days by 7.4%, with 17 downward revisions and 1 upward revision in the last 30 days. Estimates for next year rose 1.8% over 90 days.

Profitability

Profitability is green. The operating margin of 26.1% is well above its median of 19.1%, and the net margin of 18.5% is above its median of 14.2%. The gross margin of 69.2% is below its median of 71.8%. Return on invested capital is 17.7% against a weighted average cost of capital of 7.5%, and the given spread is 10.1 percentage points. The five-year median return on invested capital is 11.1%. Return on equity is 39.5%, but the DuPont split shows that much of it comes from leverage: a net margin of 14.6%, an asset turnover of 0.54 and an equity multiplier of 4.87, all as of 2025-12-31.

Growth

Growth is yellow. Revenue compound growth is 1.5% over three years, 2.5% over five years and 11.3% over ten years. Earnings per share grew 5.4% a year over three years and 14.0% over ten years. Free cash flow per share grew 4.2% a year over three years, 1.3% over five years and 23.5% over ten years. Revenue rose in 7 of the last 10 years. Growth has slowed sharply in recent years, and the earnings estimate for next year implies growth of 3.4%.

Valuation

Valuation is yellow. The price-to-earnings ratio of 13.7x is 34.9% below its median of 21.1x, and enterprise value to EBITDA of 10.5x is 20.1% below its median of 13.1x. Price to free cash flow of 13.7x is 18.1% above its median of 11.6x, and price to book of 5.4x is close to its median of 5.3x. The discounted cash flow gives 72.36 USD per share, using a discount rate of 8.87%, growth of 3.4% for the first stage and 2.5% in perpetuity; 55.3% of that value comes from the terminal value. The fair value from historical multiples is 80.88 USD. The reverse DCF implies growth of 1.2%. The dividend yield is 4.0%, with a payout of 55.1% of free cash flow. These values are estimates built on fixed assumptions, a 5% equity risk premium and capped growth, not a price target.

Risks

The main weak number is leverage: net debt of 2.13x EBITDA and debt to equity of 1.91 leave less room if earnings fall. The current-year estimate cut of 7.4% and the fall in revenue growth to 2.5% over five years suggest pressure on earnings, which would reduce free cash flow available for the dividend and buybacks. The discounted cash flow depends heavily on the terminal value, at 55.3% of the total, so small changes in assumptions move the result. Some values are not available here: a debt maturity schedule and revenue by segment. The analysis also relies on fixed assumptions and does not cover products' patent expiry dates or pipeline outcomes.