The Market May Be Too Pessimistic About This 4-Star Dividend Stock

Bristol-Myers Squibb is heading into a difficult stretch, with key patent expirations expected to weigh on revenue and earnings in the years ahead. Still, the stock remains one of Morningstar Chief US Market Strategist Dave Sekera’s go-to pharmaceutical picks. On a recent episode of The Morning Filter podcast, 4 Stocks to Buy for the Long Term While They’re Still Undervalued, Sekera explained why he thinks the market is underestimating the strength of the drugmaker’s pipeline.

Adept at partnerships and acquisitions, Bristol-Myers Squibb has built a strong portfolio of drugs and a robust pipeline. This strategy is evident in the acquisition of Celgene, which netted the company an excellent pipeline and a strong foothold in blood cancer. More recent acquisitions—oncology companies Mirati Therapeutics and RayzeBio and neurology firm Karuna Therapeutics—also help support Bristol’s strong overall pipeline and wide moat. Bristol is aggressively repositioning itself to expand through challenging patent losses for drugs representing the majority of its sales.

Key Morningstar Metrics for Bristol

• Fair Value Estimate
  : $70
• Star Rating
  : 4 Stars
• Economic Moat Rating
  : Wide
• Uncertainty Rating
  : Medium

Economic Moat Rating

Bristol’s wide moat is based on a broad lineup of patent-protected drugs, an entrenched salesforce, and economies of scale. The patent protection allows the company to price its drugs at levels that translate into superior returns on invested capital and also provides ample time to bring forward the next generation of new drugs. Several of Bristol’s currently marketed drugs are biologics, which create additional hurdles for generic companies as the cost of developing and marketing biosimilars is much higher than for typical generic small molecules. Also, an entrenched salesforce enables Bristol to partner with smaller drug companies to gain access to externally created drugs, augmenting its internal drug-development efforts. Bristol’s sheer size generates the strong and stable cash flows required to fund the clinical trials needed to bring each new drug to the market.

Read more about Bristol’s moat rating.

Fair Value Estimate for Bristol Stock

Our fair value estimate is $70 per share. We project compound annual sales declines of nearly 6% over the five years ending in 2030 as newer core treatments like cardiovascular drug Camzyos, cell therapy Breyanzi, anemia drug Reblozyl, and schizophrenia drug Cobenfy partially offset patent pressures, including the recent loss of exclusivity for cancer drugs Revlimid and Pomalyst and upcoming losses for cardiovascular drug Eliquis and cancer drug Opdivo. We believe the Celgene acquisition created value for Bristol, even though Revlimid and Pomalyst now create growth headwinds as generics enter the market.

Read more about Bristol’s fair value estimate.

Risk and Uncertainty

Bristol is exposed to the same risks facing the entire pharmaceutical group, including generic threats, decreasing pricing power owing to managed care constraints, and product liability cases. From a product-specific standpoint, we believe the company’s largest pipeline risk surrounds its next-generation immunotherapy drugs, which could develop into major blockbusters or fail in the market, depending on clinical data. Also, the Celgene acquisition adds financial risk due to the large amount of debt needed to finance the deal.

Read more about Bristol’s risk and uncertainty.

Bristol Bulls Say

• Bristol is launching innovative drugs in cardiology and neurology, which should have strong sales trajectories, given the high unmet medical need.
• We forecast Opdivo will see annual peak sales of more than $11 billion, helping to support development costs for the next generation of drugs.
• The majority of Bristol’s late-stage pipeline focuses on rare diseases, immunology, and cancer, where drug companies hold strong pricing power and the Food and Drug Administration aggressively approves new therapies.

Bristol Bears Say

• The acquisition of Celgene came shortly before the start of generic competition for that company’s Revlimid in 2022, setting up a major growth obstacle over several years, given the planned staggered generic entry.
• Bristol faces one of the larger patent cliffs by 2028, when Opdivo and Eliquis likely face heavy generic competition.
• The Celgene acquisition added significant debt that could become challenging to repay if competition strengthens against key drugs or pricing pressures intensify in the US.

This article was compiled by Jess Bebel and Sylvia Hauser. Data as of Oct. 20, 2026, close unless otherwise noted.