Bristol-Myers Squibb (BMY -1.07%), in many ways, has led the immuno-oncology revolution with its game-changing checkpoint inhibitors Opdivo and Yervoy. However, the stock has lost a bit of its shine in the past year, thanks to Opdivo's clinical setbacks in non-small cell lung cancer. 

In fact, Bristol's shares dramatically underperformed the red-hot biotechnology industry in 2017. The broad-based iShares Nasdaq Biotechnology ETF (IBB -0.48%), after all, essentially crushed Bristol's return on capital last year.

BMY Chart

BMY data by YCharts.

As biopharmaceuticals stocks can reverse course in the blink of eye, though, it's certainly worthwhile to consider if Bristol is a name worth owning in 2018. Here is a look at both the bull and bear cases for owning Bristol's stock this year. 

A man holding a bull and a bear figurine in each hand.

Image source: Getty Images.

The bear case

Kicking things off on the bear side of the equation, Bristol's stock is still one of the most expensive equities within the pharmaceutical space -- despite its laggard status in 2017. At roughly 19 times its forward-looking earnings, Bristol's stock certainly doesn't qualify as a bargain at current levels.

The drugmaker's 12-month, trailing free cash flow of $5.39 billion is also well below average for a large-cap biopharma stock. While the company's free cash flow has been improving due to its restructuring efforts and improving top line, Bristol's penchant for aggressively pursuing external licensing deals will undoubtedly hamper its ability to boost shareholder rewards moving forward.

As proof, Bristol's forward-looking dividend yield of 2.61% is considerably lower than its closest biopharma peers, even though management did recently increase the dividend by 2.6% on an annual basis. In other words, there are much more attractive dividend plays in big pharma than Bristol.  

The bull case

The underlying driver behind Bristol's stately valuation is the fact that the company sports two franchise-level drugs with the blood thinner Eliquis (co-developed and commercialized with Pfizer) and its all-star immuno-oncology product, Opdivo. Most large-cap biopharmas, on the other hand, either have one true flagship product or are currently in the process of developing one. Topping it off, Bristol also has a number of other strong growth products in its portfolio, such as the anti-inflammatory medicine Orencia, and the leukemia drug Sprycel.

Equally as important, Bristol isn't currently facing an impending loss of exclusivity for any of its key brands, like many of its big pharma brethren. So while the drugmaker's top-line growth forecast of 2.9% this year isn't all that exciting, Bristol's modest level of revenue growth should, at least, be sustainable for years to come.

Bristol also has enough high-value clinical assets in development to markedly change its near and long-term outlook. The drugmaker, after all, sports a vast internal pipeline of immuno-oncology drugs that could produce multiple game-changing combination therapies moving forward. Bristol, in fact, arguably has the top immuno-oncology pipeline in terms of checkpoint modulators, and this rich pipeline has even reportedly sparked the interest of a handful of potential suitors. 

Is Bristol a buy in 2018?

Bristol's top-tier valuation seems to suggest the market is probably banking on additional clinical breakthroughs in immuno-oncology -- beyond Opdivo's recent approvals in liver cancer and metastatic colon cancer. Unfortunately, there's no guarantee of success in the clinic, and the next generation of immuno-oncology drugs -- combination therapies -- have so far failed to live up to the hype. Viewed this way, Bristol's stock arguably doesn't come across as a screaming buy from either a growth or value investing standpoint right now.