So you are staring at Bristol-Myers Squibb’s ticker and wondering if now is the time to make a move. When a stock like this shows a long-term downtrend but still dominates conversations in the pharma sector, it’s only natural to ask whether the negative sentiment has gone too far. This year alone, shares have slid 20.7%, with a 6.7% decline over the last month and even a dip of 2.6% in the past week. What’s driving all the caution, and is Wall Street missing something under the hood?
Much of the recent price turbulence seems tied to policy uncertainty. The ongoing discussions around pharmaceutical tariffs, plus the possibility of new fees on patent holders, have clearly rattled investors. Regulatory risk is tricky for any sector, but especially for big pharma names like Bristol-Myers Squibb. Despite those concerns, not all signals are flashing red for the stock.
On the valuation front, Bristol-Myers posts a solid score of 4 out of 6, based on key checks for undervaluation. While recent performance might seem disheartening, this number suggests the company is undervalued on most major metrics. That is the sort of foundation that can make a stock worth a second glance, even when headlines look rough.
Next up, let’s dive into the specifics of how Bristol-Myers Squibb fares across different valuation methods. Stick around for what could be an even more insightful way to get to the heart of its true worth.
A Discounted Cash Flow (DCF) model is a widely used method that estimates a company’s intrinsic value by projecting its future cash flows and discounting them back to today’s dollars. This approach helps investors determine whether a stock is currently trading above or below its true worth based on expected business performance.
For Bristol-Myers Squibb, the latest reported Free Cash Flow stands at $14.64 billion. Analysts have forecasted cash flows through 2029, with the company’s Free Cash Flow projected to be $12.44 billion in five years. Beyond that, projections are extended based on historical growth rates and estimates. Over the next decade, annual Free Cash Flow is expected to hover between $12 billion and $14 billion, highlighting stable long-term prospects in $.
According to this two-stage Free Cash Flow to Equity DCF model, the estimated intrinsic value per share is $140.23. This implies the stock is currently trading at a steep 67.9% discount to its fair value, which makes it appear significantly undervalued by this yardstick.
Our Discounted Cash Flow (DCF) analysis suggests Bristol-Myers Squibb is undervalued by 67.9%. Track this in your watchlist or portfolio, or discover more undervalued stocks.
For a profitable company like Bristol-Myers Squibb, the Price-to-Earnings (PE) ratio remains one of the most widely respected ways to assess valuation. The PE ratio lets investors quickly gauge how much the market is willing to pay today for a dollar of current earnings, making it a go-to metric for businesses with steady profitability.
What counts as a “normal” or “fair” PE ratio depends a lot on expectations for earnings growth and the risks investors perceive. Companies with stronger growth prospects or less risk typically command higher PE ratios, while mature or riskier businesses may see their multiples drift lower.
Bristol-Myers Squibb currently trades on a PE ratio of 18.1x, which is just below the broader Pharmaceuticals industry average of 18.4x, and somewhat above key peer averages of 16.3x. However, instead of solely focusing on these benchmarks, Simply Wall St calculates a proprietary “Fair Ratio” in this case, 24.3x which accounts not just for industry groupings, but also the company’s profit margin, market cap, growth prospects, and risk profile. This nuanced approach can offer a more tailored perspective than broad industry averages or competitor multiples alone.
Comparing Bristol-Myers Squibb’s actual PE of 18.1x with the Fair Ratio of 24.3x, there appears to be meaningful undervaluation, suggesting the market may be overlooking its strengths and future potential.
Earlier we mentioned that there’s an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is a clear, approachable way to connect what you believe about a company’s future, such as its expected revenue growth, earnings, or profit margins, with a real-world financial forecast and an instant fair value estimate. Instead of just relying on ratios or broad theories, Narratives allow you to tell the story behind the numbers: your perspective on where Bristol-Myers Squibb is headed and why.
Available on Simply Wall St’s Community page and used by millions, Narratives are an accessible and practical tool for investors to input their own views or follow those of others, see the fair value generated, and compare it instantly with the current share price. Narratives are not fixed in place; whenever major news, fresh earnings, or new estimates are published, your Narrative’s fair value, charts, and risk factors all update so you’re always working with the latest picture, not stale data.
For instance, one investor might expect declining revenues and set a Narrative fair value for Bristol-Myers Squibb at $34, while another bullish investor, focusing on new product launches and long-term demand, sets their fair value as high as $68. This gives you a spectrum of perspectives to help decide when the price is right for you.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
