Natan
Contrarian Stock Investor
Bristol Myers Squibb and Merck look expensive given the market's optimism about their patent cliffs. Bristol Myers trades at 13x and Merck at 16x 2028 EV/FCF, versus Regeneron at 9.5x, which is ridiculous. As @PCM_bio notes, Opdivo loses exclusivity in 587 days and Bristol has done little to address that or its other patent expirations. x.com x.comÂ
Moderna generates one-tenth of Bristol Myers Squibb's revenue, making their nearly equal valuations hard to justify. x.comÂ
Regeneron could benefit as managers rotate from AI into lagging sectors. UBS upgraded it to Buy and lifted its target from $660 to $978, arguing its drugs lined up to replace Dupixent are worth more than Wall Street expects. x.com x.comÂ
Merck looks cheap at 16x earnings when drugmakers usually get 20x. Fair value is roughly $168-214, or 20x next year's expected $9.57 EPS give or take 12%, putting the stock about 10% below the bottom of that range; it would be expensive above $215. The view leans on forecasts, with forward EPS 32% above trailing, and involves no fundamental work. x.comÂ
Prime Medicine looks unusually inexpensive relative to its platform at a roughly $570 million market cap. Bristol Myers Squibb's deal includes over $3.5 billion of potential milestones, six times that value, plus royalties, and gives Prime a route into cancer and immunology; their value depends on success, timing and costs. Prime editing can make all 12 single-letter DNA substitutions and insert or delete DNA, and its first CGD patients reached 69% and 83% functional neutrophils by day 30. x.comÂ
Merck has downside risk even as Moderna soared 176% today, with Wall Street analysts seeing the stock potentially as low as $105 a share. x.comÂ
Bristol Myers Squibb offers a strong drug pipeline and a 4.3% dividend, making it a slow but safe long-term holding. It sits in one of the market's largest bullish ascending triangles, with a 350% gain projected to complete Wave 5. x.comÂ
Merck looks overvalued at a forward P/E of 110. x.comÂ
Pfizer is cheap against its cash earnings at about 8 times, while drugmakers usually get 14 times. Fourteen times next year's cash earnings, give or take 12%, puts fair value at about $48.49-$61.71, so the $27.02 price sits 44% under the low end. This is a levels-only screen off reported earnings and revenue estimates, with no fundamental work. x.comÂ
Regeneron no longer meets the return threshold for a non-defensive holding. Its exponential growth ran from the financial crisis to the mid-2010s and has not worked since, and it pays almost no dividend. Unlike gold, oil or safety holdings, it needs to deliver strong returns to justify its place, though it may regain its momentum within five years. x.com x.comÂ
Moderna's oncology franchise has been repriced by the Merck-partnered INTerpath-001 melanoma vaccine trial, a watershed moment. Argus upgraded the stock to Buy with a $180 target, noting shares remain more than 70% below their old highs, and Moderna closed an upsized $2.6 billion convertible note to fund oncology growth. The stock is consolidating in a tight pennant after its biggest gap up in years; a move above $156.13 targets $161.37, then $176.66. x.comÂ
