How Does Bristol-Myers Squibb’s Valuation Compare To Its Peers?

Bristol-Myers Squibb’s (NYSE:BMY) market cap is much lower than some of the large pharmaceuticals companies, including J&J, Merck, and Pfizer. Despite garnering higher revenue growth, and adjusted net earnings margin in-line with peers, its current price to earnings multiple is lower than others. This can be attributed to trends in one of its top selling drugs, Opdivo, and caution ahead of its Celgene acquisition. Overall, it appears that Bristol-Myers Squibb is currently undervalued when compared to its peers, in our view. You can look at our interactive dashboard analysis ~ BMY Valuation: How Does Bristol-Myers Squibb’s Valuation Compare To Its Peers? ~ for more details. In addition, you can see more Healthcare Data here.

Bristol-Myers Squibb’s Market Cap Is Much Lower Than Its Peers Merck, Pfizer, And Johnson & Johnson.

• Market Cap:
  • Bristol-Myers Squibb: $82.7 Billion
  • Merck: $218 Billion
  • Pfizer: $203 Billion
  • Johnson & Johnson: $348 Billion

Bristol-Myers Squibb’s Price To Earnings Multiple Is Lower Than That of Merck, Pfizer, And Johnson & Johnson, On Average Consensus Earnings Estimate For 2019.

• P/E Multiple:
  • Bristol-Myers Squibb: 11.8x
  • Merck: 17.3x
  • Pfizer: 13.0x
  • Johnson & Johnson: 15.3x

Why Is The P/E Multiple For Bristol-Myers Squibb Lower?

• Bristol-Myers Squibb’s P/E Multiple of 11.8x on average consensus EPS of 4.28 for 2019, is lower than 13.0x for Pfizer, 17.3x for Merck, and 15.3x for J&J.
• Bristol-Myers Squibb multiple based on current market price appears to be on the lower side, in our view.
• The company’s P/E Multiple has been on a decline in the recent past. This can be attributed primarily to two factors:
  • 1) The company’s top selling oncology drug Opdivo has been losing some of its market share to Merck’s Keytruda, and Opdivo’s future growth is now largely dependent on additional approvals it can garner. As of now, the company’s performance is dependent only on two drugs – Opdivo and Eliquis. However, this would change post its acquisition of Celgene.
  • 2) Some of the investors are cautious about the long term growth of the company post the Celgene acquisition.

Bristol-Myers Squibb’s Revenue Grew At A Faster Pace Between 2015 And 2018, When Compared To Some of Its Peers.

• Bristol-Myers Squibb’s revenues grew at an average annual rate of 11% from 2015 to 2018. Much of that growth came in 2016, led by a strong uptick in Eliquis and Opdivo sales.
• This compares with Merck’s average annual growth rate of 2%, Pfizer’s 3%, and J&J’s 5% during the same period.

Bristol-Myers Squibb’s EBITDA Margin Is Lower Than Its Peers

• Bristol-Myers Squibb’s Adjusted EBITDA Margin has been in the range of 30% to 32% over the last few years.
• This compares with 30% to 31% range for Merck, 31% to 40% range for Pfizer, and 47% to 50% range for J&J.
• J&J’s margins are much higher than its peers, due to its key expenses, such as R&D, as a percentage of revenue being lower than others.

Bristol-Myers Squibb’s Adjusted Net Income Margin Has Been More Or Less In Line With That of Johnson & Johnson And Merck But Lower Than That of Pfizer.

• Bristol-Myers Squibb’s Adjusted Net Income Margin grew from 20.4% in 2015 to 28.9% in 2018.
• Merck’s adjusted net income margin grew from 25.8% in 2015 to 27.5% in 2018.
• Pfizer’s adjusted net income margin grew from 28.2% in 2015 to 33.5% in 2018.
• And that of J&J grew from 24.9% to 27.4% during the same period.

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