Looking to Buy Bristol Myers Squibb Stock on the Dip? Read This First.
Key Points
Bristol Myers Squibb faces a daunting patent cliff.
The company has a promising growth portfolio, but it may not be able to fully offset losses from older drugs.
Income investors and patient investors who aren't risk-averse could still find Bristol Myers Squibb stock attractive.
- 10 stocks we like better than Bristol Myers Squibb ›
Bristol Myers Squibb's (NYSE: BMY) shares are rebounding after sinking roughly 11%. However, the big pharma stock remains below the early March year-to-date peak. With a forward price-to-earnings multiple of only 9.4, Bristol Myers Squibb may seem to be an attractive pick for value investors.
But numbers don't always tell the full story. Looking to buy Bristol Myers Squibb on the dip? There's something you need to know first.
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The risks are real
Some stocks are cheap for a season. Others are cheap for a reason. Bristol Myers Squibb definitely falls into the latter category right now. The drugmaker faces multiple risks that investors shouldn't ignore.
A daunting patent cliff tops the list. Sales for blood cancer drug Revlimid are already declining sharply in the wake of generic competition. Bristol Myers Squibb's two top-selling products, the blood thinner Eliquis and the cancer immunotherapy Opdivo, lose U.S. patent exclusivity in 2028.
Don't rate Bristol Myers Squibb as a great value stock solely because of its low forward earnings multiple. Because of the company's patent cliff, any valuation metrics based on 2026 or 2027 earnings are practically useless.
Sure, Bristol Myers Squibb has completed multiple acquisitions to boost its growth prospects. The company bought Mirati Therapeutics, Karuna Therapeutics, and RayzeBio in 2023. It acquired 2seventy bio and Orbital Therapeutics last year. While acquisitions offer potential, they also entail integration and clinical risks.
Bristol Myers Squibb executives focus heavily on the drugmaker's growth portfolio rather than its legacy drugs. They emphasized in the 2026 first-quarter earnings update that the growth portfolio accounted for the majority of total revenue. That's true, but the legacy portfolio still makes up roughly 46% of revenue. With total revenue increasing by only 1% on a constant-currency basis, there's a real possibility that the growth drugs won't be able to offset losses from the older blockbusters.
Why Bristol Myers Squibb may still be attractive
Do these risks mean that Bristol Myers Squibb is a stock to avoid? Not necessarily. Whether or not buying the stock on the dip makes sense depends on your investing style and risk tolerance.
Risk-averse investors will probably be better off finding other stocks to buy. It's a similar story for investors with short investing time horizons. Bristol Myers Squibb's fortunes won't improve dramatically over the next couple of years.
However, patient investors who aren't afraid to take on risk could like Bristol Myers Squibb's long-term prospects. Income investors will also probably find the company's 4.2% dividend yield enticing.
Bristol Myers Squibb could be a good stock to buy on the dip, but only for some investors.
Should you buy stock in Bristol Myers Squibb right now?
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Keith Speights has positions in Bristol Myers Squibb. The Motley Fool has positions in and recommends Bristol Myers Squibb. The Motley Fool has a disclosure policy.
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