Two Pharmaceutical Stocks to Buy While Wall Street Chases GLP-1 Leaders

The pharmaceutical industry has become fixated on GLP-1 weight loss medications, with investors pouring capital into companies leading this category. However, this singular focus has created an overlooked segment of the market worth exploring. Bristol Myers Squibb and Merck represent compelling pharmaceutical stocks to buy for investors seeking exposure beyond the hype surrounding the latest drug class. Both companies offer attractive valuations and substantial dividend yields that contrast sharply with the premium valuations commanded by GLP-1 specialists.

The challenge with market enthusiasm is that it often creates valuation extremes. When Wall Street becomes concentrated on a single investment narrative, alternative opportunities emerge at discounted levels. This is precisely the environment we see today in pharmaceutical equities.

Why Eli Lilly Isn’t the Only Pharma Play

Eli Lilly has earned its spotlight as the GLP-1 market leader, with products like Mounjaro and Zepbound generating substantial revenue. The company’s dominance in this new drug category is undeniable, and the market has responded accordingly. Currently, Eli Lilly’s price-to-earnings ratio sits near 50, reflecting investor enthusiasm for its GLP-1 pipeline.

However, this valuation deserves scrutiny. When a single company dedicates more than 50% of its revenue to two drugs—regardless of their market potential—there’s inherent concentration risk. History reminds us that industry dominance isn’t guaranteed. Novo Nordisk previously held the GLP-1 leadership position before Eli Lilly surpassed it, demonstrating that market share in emerging drug categories can shift.

The pharmaceutical sector operates on a continuous cycle of innovation and patent expiration. New drugs provide patent-protected profit streams until exclusivity ends—a phenomenon known as the patent cliff. This structural reality means pharmaceutical companies must perpetually develop new medications to maintain profitability. Today’s GLP-1 leader won’t remain tomorrow’s brightest prospect indefinitely.

Merck and Bristol Myers Squibb Offer Attractive Valuations

For investors seeking pharmaceutical stocks to buy at reasonable prices, Merck and Bristol Myers Squibb present a distinct alternative. These companies have positioned themselves outside the GLP-1 race, focusing instead on established therapeutic areas: cardiovascular disease, oncology, and immunology.

Merck’s valuation reflects this positioning. The company trades at a price-to-earnings ratio of 13, well below its five-year average of 21. Bristol Myers Squibb offers a P/E ratio of 17.5, still substantially lower than Eli Lilly’s current multiple. This valuation gap exists precisely because Wall Street’s attention has drifted toward weight loss medications.

From an income perspective, dividend yields tell an equally compelling story. Merck’s yield stands at 3.4%, while Bristol Myers Squibb delivers 4.7%—a sharp contrast to Eli Lilly’s 0.6% yield. For dividend-focused investors, this differential becomes material over time.

Dividend sustainability matters as much as yield magnitude. Merck’s payout ratio hovers near 45%, indicating substantial room for dividend growth without straining cash flows. Bristol Myers Squibb’s payout ratio approaches 85%, which is higher but still manageable for a mature pharmaceutical company with consistent revenue generation. Both companies demonstrate the financial capacity to maintain and potentially increase shareholder distributions.

The Opportunity in Overlooked Sectors

The pharmaceutical industry occasionally experiences rotation cycles where attention concentrates on specific drug categories while established players trade at depressed valuations. Today’s environment reflects exactly this dynamic. Merck and Bristol Myers Squibb represent industry giants with proven capabilities in drug development, regulatory navigation, and commercial execution.

These companies have survived multiple market cycles, patent expirations, and regulatory challenges. Their scale, diversified pipelines, and established market positions provide structural advantages regardless of whether GLP-1 medications maintain their current popularity or encounter competitive pressures.

A contrarian approach to pharmaceutical stocks to buy might involve stepping back from the GLP-1 narrative to examine companies trading at reasonable multiples while delivering above-average dividend yields. Markets reward concentrated enthusiasm until they don’t—and when sentiment shifts, valuations adjust rapidly.

What Makes These Stocks Worth Considering Today

The case for considering Merck and Bristol Myers Squibb rests on three fundamental pillars: valuation discipline, income generation, and operational resilience. Neither company requires betting on a single drug category to generate acceptable returns. Instead, both benefit from diversified portfolios spanning multiple therapeutic areas and patient populations.

Bristol Myers Squibb and Merck aren’t going away. Regardless of whether this GLP-1 cycle extends for years or represents a temporary market enthusiasm, these pharmaceutical stocks to buy offer exposure to companies with long track records of adaptation and growth. For investors fatigued by the GLP-1 narrative or seeking better risk-adjusted returns, both merit closer examination in your portfolio construction process.