Is Bristol Myers Squibb Stock A Better Pick Over Its Industry Peer?

BMY: Bristol Myers Squibb logo
Bristol Myers Squibb

We believe that Bristol Myers Squibb stock (NYSE: BMY) is currently a better pick than its industry peer, Eli Lilly stock (NYSE: LLY), given its better growth prospects. Eli Lilly is trading at 10.7x trailing revenues compared to 3.2x for BMS. Investors have assigned a higher multiple to LLY stock due to its robust pipeline and better profitability, as discussed below.

If we look at stock returns, Eli Lilly, with 15% returns in the last twelve months, has fared better than BMS, down 5%, and the broader S&P 500 index, down 11%. There is more to the comparison, and in the sections below, we discuss why we believe BMY is a better pick over LLY. We compare a slew of factors, such as historical revenue growth, returns, and valuation, in an interactive dashboard analysis of Bristol Myers Squibb vs. Eli LillyWhich Stock Is A Better Bet? Parts of the analysis are summarized below.

1. Bristol Myers Squibb’s Revenue Growth Is Better

  • Eli Lilly’s revenue growth of 0.8% in the last twelve months is slightly better than -0.5% for BMS.
  • However, if we look at a longer time frame, BMS has fared better, with its sales rising at an average annual rate of 24% to $46.2 billion in 2022, compared to $26.1 billion in 2019, while Eli Lilly’s sales grew at an average annual rate of 9% to $28.5 billion in 2022, compared to $22.3 billion in 2019.
  • BMS’ revenue growth was bolstered by its Celgene acquisition in 2019.
  • The recent rise in BMS revenue has been led by market share gains for some of its drugs, including its anticoagulant – Eliquis. However, the company now faces biosimilar competition for its top-selling drug – Revlimid.
  • Revlimid sales declined a significant 32% y-o-y to $2.3 billion in 2022. However, Opdivo sales were up 11%, and some of its newly approved drugs, including Abecma, Zeposia, Reblozyl, and Breyanzi, were up between 30% and 80%. Most of these drugs are potentially blockbuster drugs, and as they gain market share, their sales growth will likely more than offset the decline from Revlimid.
  • Eli Lilly’s revenue growth has been driven by continued market share gains for drugs such as Trulicity, Verzenio, Jardiance, and its Covid-19 antibodies. The company has secured U.S. FDA approval for its diabetes drug – Tirzepatide – which is expected to garner over $5 billion in peak sales.
  • Eli Lilly has a robust product cycle, including Alzheimer’s treatment – Donanemab – one of the most anticipated drugs with peak sales pegged as high as $10 billion. This is one of the key reasons for investor optimism in LLY stock, along with its recently approved type 2 diabetes drug – Mounjaro – with peak sales estimated at around $15 billion.
  • Our Bristol Myers Squibb Revenue and Eli Lilly Revenue dashboards provide more insight into the companies’ sales.
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2. Eli Lilly Is More Profitable 

  • Eli Lilly’s operating margin of 25% over the last twelve-month period is better than 20% for BMS.
  • This compares with 22% and 23% figures seen in 2019, before the pandemic, respectively.
  • BMS’ free cash flow margin of 28% is higher than 25% for Eli Lilly.
  • Our Bristol Myers Squibb Operating Income Comparison and Eli Lilly Operating Income Comparison dashboard provides more details.
  • Looking at financial risk, both are comparable. Although Eli Lilly’s 5% debt as a percentage of equity is lower than 28% for BMS, the latter’s 10% cash as a percentage of assets is higher than 4% for Eli Lilly, implying that Eli Lilly has a better debt position, but BMS has more cash cushion.

3. The Net of It All

  • We see that BMS has demonstrated better revenue growth, has more cash cushion, and is trading at a comparatively lower valuation multiple. On the other hand, Eli Lilly has a better debt position and is more profitable.
  • Now, looking at prospects, using P/S as a base, due to high fluctuations in P/E and P/EBIT, we believe Bristol Myers Squibb is currently a better pick.
  • Our forecast indicates an expected return of 50% for BMS over the next three years vs. a -10% expected return for Eli Lilly, implying that investors will likely be better off picking BMY over LLY, based on Trefis Machine Learning analysis – Bristol Myers Squibb vs. Eli Lilly – which also provides more details on how we arrive at these numbers.

While BMY stock looks like it can see higher levels, it is helpful to see how Bristol Myers Squibb’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised at how counter-intuitive the stock valuation is for Mednax vs. Penske Automotive.

Despite inflation rising and the Fed raising interest rates, BMY stock has declined 5% in the last twelve months, outperforming the broader S&P 500 index, down 8%. But can it drop from here? See how low Bristol Myers Squibb stock can go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Mar 2023
MTD [1]
YTD [1]
Total [2]
BMY Return -2% -7% 15%
LLY Return 7% -9% 354%
S&P 500 Return 0% 3% 77%
Trefis Multi-Strategy Portfolio -3% 3% 226%

[1] Month-to-date and year-to-date as of 3/21/2023
[2] Cumulative total returns since the end of 2016

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