Bristol-Myers Squibb Company (NYSE:BMY) is in an interesting spot. The company is still one of the biggest names in pharmaceuticals, but its investment story is changing. Some of its older blockbuster drugs are facing patent and generic pressure. At the same time, newer medicines are starting to do more of the heavy lifting. That transition is going to be important for investors over the next few years, and the latest results suggest Bristol Myers is making some progress.
Bristol Myers has several things working in its favor. Its moat comes from its intellectual property, drug development capabilities, global sales infrastructure, and scale. Bringing a new drug to market takes years of research, billions of dollars, and regulatory approval. Once a drug succeeds, patents can give the company years of protection from direct competition.
That is not an easy business for smaller companies to replicate. The company also has a broad portfolio covering areas such as oncology, immunology, hematology, cardiovascular disease, and psychiatry. That diversification is becoming more important as the pharmaceutical industry moves toward another major wave of patent expirations. The company’s defensive qualities also make it worth considering alongside other defensive stocks to buy.
Morningstar expects 2028 to be one of the industry’s biggest patent-loss years since 2012-14. At the same time, it expects new drug launches and existing growth products to offset a large portion of the revenue lost from older medicines.
Bristol Myers is already seeing that shift in its own numbers. Its Growth Portfolio generated $7.6 billion in revenue during the second quarter of 2026, up 15% from a year earlier. It now accounts for nearly 60% of the company’s total revenue. That is a pretty significant change for a company that has relied heavily on a handful of established blockbusters.
Newer Drugs Are Starting to Carry More Weight
Bristol Myers brought in $12.97 billion in revenue during the second quarter, up 6% year over year. Non-GAAP EPS climbed 40% to $2.04, while GAAP EPS increased to $1.62 from $0.64.The company also raised its 2026 outlook. It now expects roughly $49 billion-$50 billion in revenue and $6.75-$7.00 in non-GAAP EPS.
A closer look at the portfolio makes the numbers more interesting. Reblozyl, Camzyos, Breyanzi, and Opdualag all continued to grow, while Opdivo Qvantig revenue jumped more than 200%, although it is still coming off a relatively small base. Eliquis also remains a major contributor, with revenue increasing 22% during the quarter.
The problem is that Bristol Myers cannot ignore what is happening with its older drugs. Legacy revenue declined 4% during the quarter as generic competition affected several products. Eliquis and Opdivo also face longer-term patent concerns. That makes the growth of the newer portfolio more than just a positive. It is becoming necessary. Moreover, with patent pressures mounting, investors may also want to see how Bristol Myers stacks up against its peers.
The Dividend Is Still a Big Part of the Story
Bristol-Myers Squibb Company pays an annualized dividend of $2.52 per share, giving the stock a yield of roughly 4.1%. Its payout ratio is around 55%, according to Yahoo Finance, while the stock’s five-year average dividend yield is about 4%. For income investors, that is a fairly attractive starting point.
The company isn’t paying out an unreasonable share of its earnings, and its drug portfolio continues to produce substantial cash flow. Pharmaceuticals also have one advantage over many cyclical businesses: demand for medicines doesn’t disappear just because the economy slows down.
Dividend growth is less exciting. Bristol Myers has raised its dividend over the years, but the pace has slowed. The company also needs to keep investing in research, acquisitions, and new medicines as it works through the patent cycle. So BMY looks more like a high-yield pharmaceutical stock with modest dividend growth than a stock investors should buy primarily for rapid dividend increases.
Valuation Looks Better When Looking Ahead
Bristol-Myers Squibb Company trades at about 13.5 times trailing earnings and 9.4 times forward earnings. That difference is worth paying attention to. The trailing P/E tells investors what they are paying for the earnings Bristol Myers has already generated. The forward P/E is based on what the market expects the company to earn going forward. At 13.5 times trailing earnings, the stock has a trailing earnings yield of roughly 7.4%. Based on the forward P/E of 9.4x, the forward earnings yield is closer to 10.7%.
That makes the stock look much more interesting when the focus shifts from the past to the earnings expected over the next year. The historical numbers also provide some perspective. BMY’s forward P/E was 6.88x in June 2025, 7.48x in September, 8.91x in December, 9.70x in March 2026, and 9.13x in June 2026. At around 9.36x now, the stock is no longer trading at the very low multiples seen during the earlier stages of the patent-cliff concerns.
Morningstar’s five-year average forward P/E of about 8.71x points in the same direction. BMY is still relatively inexpensive, but it is not being priced as if the business is in serious trouble anymore. Even so, paying less than 10 times forward earnings for a company with a roughly 4% dividend yield and a growing portfolio of newer drugs doesn’t look particularly aggressive. Bristol Myers is also worth comparing with other inexpensive pharma names.
The Bottom Line
The real question is what happens when the older blockbusters lose more of their exclusivity. If Bristol Myers can continue growing its newer medicines fast enough to fill that gap, today’s valuation could look reasonable. If that replacement process falls short, the low P/E may turn out to be justified.
For now, the latest results give investors a reason to believe the transition is moving in the right direction. The company’s moat is still meaningful, the dividend provides a solid income stream, and the forward valuation isn’t asking investors to pay a premium for the recovery story.
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This article is originally published at Insider Monkey.
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