We recently published a list of the 7 Most Undervalued Biotech Stocks To Invest In. In this article, we are going to take a look at where Bristol-Myers Squibb Company (NYSE:BMY) stands against the other most undervalued biotech stocks to invest in.
Trump’s Tariffs and the Pharma Sector
On February 21, Jared Holz, Mizuho Securities America’s healthcare sector strategist, appeared on CNBC to discuss Trump’s tariffs and their effects on the American pharma sector. Although he was unsure of the intention behind these tariffs, he opined that the pharma industry was not all that special when compared to verticals such as industrials and technology, such that President Trump would intend to enlarge its presence in the US.
The tariffs thus encompass the grander plan surrounding how the pharmaceutical industry fits into scaling up domestic manufacturing. A majority of pharma and biotech companies have a significant presence in the US. However, some questions still stand, such as whether they will hire more people in the US compared to Europe or Asia and whether they will bring back more business to America.
Holz was unclear about the answers to these questions, but he believed that anything coming out of Europe or China would obviously be fair game. Further discussing the scenario, he said that boosting manufacturing facilities and capacities from scratch is not an easy endeavor, as it takes considerable years to reach a point where companies can domestically produce at a high rate. Therefore, the impact of tariffs on the production capacity and on-shoring of pharma companies remains fuzzy.
READ ALSO: 10 Best Performing Pharma Stocks So Far in 2025 and 11 Best Pharma Stocks to Buy According to Hedge Funds.
How Will the Pharma Industry Perform in 2025?
We further discussed the potential impacts of Trump’s tariffs and the performance of the pharma industry in a recently published article on the 10 Oversold Pharma Stocks to Buy According to Analysts. This excerpt from the article offers another analyst’s point of view:
“On February 20, Emily Field, Head of European Pharma Research at Barclays, appeared on CNBC to discuss the dynamics of the pharmaceutical sector, the impact of US tariffs, and the performance of obesity drugs. She believed the industry may not underperform this year, at least in the first half. However, there are still several questions surrounding the performance of obesity drugs, as major players in the domain have exhibited contrasting previous year performance.
Talking about the tariffs, she said that their materialization poses a big open question for the pharmaceutical sector as some companies assemble their products in the US after manufacturing them abroad. Manufacturing costs are thus pretty low for these companies, which is a significant point to consider when determining the impact of tariffs. She believed that absorbing the additional cost of the tariffs would be very manageable for these companies. The market has reached the tail-end of the earnings season, and the situation hasn’t come up much on earnings calls over this quarter.”
Our Methodology
We sifted through stock screeners, online rankings, and ETFs to compile a list of 15 biotech and biopharma stocks with a forward P/E of less than 15. We then selected the top 7 with the highest number of hedge fund holders as of Q4 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of hedge fund sentiment.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A pharmacy shelves stocked with pharmaceutical drugs awaiting distribution.
Bristol-Myers Squibb Company (NYSE:BMY)
Forward P/E: 9.12
Number of Hedge Fund Holders: 88
Bristol-Myers Squibb Company (NYSE:BMY) is a biopharmaceutical company that discovers, develops, and delivers advanced medicines for serious diseases. Its medicines fall into various therapeutic classes, including hematology, oncology, cardiovascular, immunology, and neuroscience.
Bristol-Myers Squibb Company (NYSE:BMY) has exhibited strong performance in dividend growth, with eight consecutive years of increases and outperforming the sector median of two years by 300%. It has maintained dividend payments for 35 consecutive years, surpassing the sector median of 15 years by 133%. This reflects the company’s strong financial health and ability to deliver value to shareholders.
The company also has a strong drug portfolio and robust pipeline due to acquisitions and partnerships, forming a base of a wide economic moat. For instance, its acquisition of Celgene strengthened its pipeline, providing it with a strong entrenchment in blood cancer. Bristol-Myers Squibb Company’s (NYSE:BMY) recent acquisitions of oncology firms RayzeBio and Mirati and neurology firm Karuna have further bolstered its overall pipeline.
Overall, BMY ranks 3rd on our list of the most undervalued biotech stocks to invest in. While we acknowledge the potential of BMY as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BMY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
