(FORTUNE Magazine) – Battered by an accounting scandal and a wave of patent expirations on several key drugs, Bristol-Myers Squibb (BMY, $29) has been languishing in the sick ward for the past two years. The drug giant recently restated its financial statements for the years 1999--2001, primarily to correct an error in the timing of revenue recognition to wholesalers. And after losing patent protection on two leading medications, the company is set to lose patent protection on Pravachol, its top-selling cholesterol drug, in 2006.

But recent buying by some of the fund industry's top value managers, including John Linehan of the T. Rowe Price Value fund and Bill Nygren at Oakmark Select, indicates that Bristol may not be as sick as it seems (FORTUNE came to the same conclusion last year; see fortune.com). The company is gaining operating momentum: It expects to file for approval of three drugs in the next 12 to 15 months, a sizzling pace for any drugmaker. Next month the FDA is expected to approve Erbitux, a potential blockbuster cancer drug from scandal-tarred ImClone Systems that Bristol is helping bring to market.

At its current price Bristol's stock appears to have little downside. Shares are selling for 20 times trailing earnings, significantly lower than the industry's average P/E of 28 and Bristol's historical average of 25. Plus the dividend yield is nearly 4%. Linehan figures the drugmaker is worth $36 to $40 a share. --David Stires