The inelastic demand for pharmaceutical solutions should help stocks in this space stay afloat amid the current market fluctuations caused by macroeconomic headwinds. Moreover, rising investments in research and development and business collaborations should drive the industry’s growth in the long run.
The global pharmaceuticals market is expected to grow at a 5.9% CAGR to reach $1.40 trillion by 2026. Investors’ interest in this space is evident from the VanEck Vectors Pharmaceutical ETF’s (PPH) 6.3% returns over the past nine months versus the SPDR S&P 500 ETF’s (SPY) 12.2% loss.
Therefore, it could be wise to invest in fundamentally sound pharmaceutical stocks AbbVie Inc. (ABBV), Amgen Inc. (AMGN), Catalyst Pharmaceuticals, Inc. (CPRX), Novo Nordisk A/S (NVO), and Vertex Pharmaceuticals Incorporated (VRTX) for the long haul. Our proprietary POWR Ratings system has rated these stocks Strong Buy.
AbbVie Inc. (ABBV)
ABBV develops, manufactures, and sells a range of pharmaceutical products. The company’s products are focused on treating diseases related to immunology, oncology, virology, neuroscience, eye care, women’s health, gastroenterology, and other serious health conditions.
After receiving the positive results from the Phase 3 SELECT-AXIS 2 study, on June 27, 2022, the European Medicines Agency's (EMA) Committee for Medicinal Products for Human Use (CHMP) approved the usage of ABBV’s upadacitinib (RINVOQ) in treating patients with active non-radiographic axial spondyloarthritis (nr‑axSpA) and help control the disease symptoms. This should help RINVOQ to gain wide reach across the industry.
ABBV’s net revenues for its fiscal 2022 first quarter ended March 31, 2022, increased 4.1% year-over-year to $13.54 billion. The company’s operating earnings came in at $4.72 billion, indicating a 15% year-over-year improvement.
Its adjusted net income came in at $5.64 billion for the quarter, representing a 9.3% rise from the prior-year period. ABBV’s adjusted EPS increased 9.3% year-over-year to $3.16. As of March 31, 2022, ABBV had $6.10 billion in cash and equivalents.
Analysts expect the company’s EPS to increase 10.3% year-over-year to $14.01 for its fiscal year 2022, ending December 31, 2022. It surpassed the consensus EPS estimates in each of the trailing four quarters, which is impressive.
The consensus revenue estimate of $59.64 billion for the same fiscal year represents a 6.3% rise from the prior-year period. The company’s EPS is expected to grow at a 1.9% rate per annum over the next five years.
The stock has gained 42.1% over the past nine months to close the last trading session at $152.49.
ABBV’s POWR Ratings reflect this promising outlook. The stock has an overall A grade, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has an A grade for Quality and a B grade for Growth and Sentiment. Click here to see the additional ratings for ABBV’s Value, Stability, and Momentum.
ABBV is ranked #6 of 172 stocks in the Medical - Pharmaceuticals industry.
Amgen Inc. (AMGN)
AMGN is a biotechnology company that discovers, develops, manufactures, and delivers human therapeutics focused on inflammation, oncology/hematology, bone health, cardiovascular disease, nephrology, and neuroscience areas worldwide. It distributes its products through pharmaceutical wholesale distributors and direct-to-consumer channels.
On June 6, 2022, the FDA approved AMGN’s RIABNI, a biosimilar to Rituxan, in combination with methotrexate for adults with rheumatoid arthritis (RA).
Already in use for treating adult patients with Non-Hodgkin's Lymphoma (NHL), Chronic Lymphocytic Leukemia (CLL), Granulomatosis with Polyangiitis (GPA), and Microscopic Polyangiitis (MPA), this approval should help RIABNI to gain wide market reach.
For its fiscal year 2022 first quarter ended March 31, 2022, AMGN’s total revenues increased 5.7% year-over-year to $6.24 billion. The company’s non-GAAP operating income came in at $3.14 billion, up 9.6% from the year-ago period.
AMGN’s non-GAAP net income came in at $2.34 billion, representing a 9% rise from the prior-year period. Its non-GAAP EPS came in at $4.25, indicating a 14.9% year-over-year improvement. As of March 31, 2022, the company had $6.53 billion in cash and cash equivalents.
Analysts expect the company’s EPS to grow 2% year-over-year to $17.44 for fiscal 2022 ending December 31, 2022. It surpassed the consensus revenue estimates in each of the four trailing quarters.
The consensus revenue estimate of $26.22 billion for the same fiscal year represents a 0.9% year-over-year improvement. AMGN’s EPS is expected to grow at a rate of 7.1% per annum over the next five years.
Over the past nine months, the stock has gained 14.7% and closed the last trading session at $243.51.
AMGN’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system.
It has an A grade for Quality and a B grade for Stability and Growth. Click here to see the additional ratings for AMGN’s Value, Sentiment, and Momentum.
AMGN is ranked #4 of 398 stocks in the Biotech industry.
Catalyst Pharmaceuticals, Inc. (CPRX)
CPRX is a commercial-stage biopharmaceutical company that focuses on developing and commercializing therapies for people with rare debilitating, chronic neuromuscular, and neurological diseases.
It has license agreements with BioMarin Pharmaceutical Inc. (BMRN) and a collaboration and license agreement with Ireland-based Endo Ventures Limited for developing and commercializing generic Sabril tablets.
On March 2, 2022, the United States Patent and Trademark Office (USPTO) notified CPRX regarding issuing an additional patent covering FIRDAPSE Tablets 10 mg, the company's proprietary formulation of amifampridine, in the following weeks. The new patents are directed to the treatment of patients suffering from Lambert-Eaton myasthenic syndrome (LEMS).
The issuance of these new patents will further extend FIRDAPSE's growing intellectual property portfolio.
For its fiscal 2022 first quarter ended March 31, 2022, CPRX’s total revenues increased 42.7% year-over-year to $43.09 million. The company’s operating income came in at $17.37 million, representing a rise of 77.2% from the year-ago period.
CPRX’s non-GAAP net income came in at $19.40 million, indicating a 67.9% rise from the prior-year period. Its non-GAAP EPS increased 63.6% year-over-year to $0.18. The company had cash and investments of $178.37 million as of March 31, 2022.
The consensus EPS estimate of $0.67 for fiscal 2022 ending December 31, 2022, indicates an 81.1% rise from the prior-year period. Analysts expect the revenue to be $200.85 million for the same fiscal year, representing a 42.6% year-over-year improvement.
Over the past nine months, the stock has gained 36.2% and closed the last trading session at $6.88.
CPRX’s POWR Ratings reflect its solid prospects. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system.
It has an A grade for Quality and Value and a B grade for Growth. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for CPRX’s Momentum, Sentiment, and Stability here.
CPRX is ranked #12 in the Medical - Pharmaceuticals industry.
Novo Nordisk A/S (NVO)
NVO is a Denmark-based company that discovers, develops, manufactures, and markets pharmaceutical products worldwide. The company focuses on diabetes care and offers insulin delivery systems and other diabetes products.
On June 12, 2022, NVO announced phase 3 results from the REAL 4 study of once-weekly Sogroya injection in helping children achieve growth targets of annualized height velocity (AHV). Growth Hormone Deficiency (GHD) is a rare disease that often starts early in life and is estimated to affect approximately 1 in 3,500 to 10,000 children.
Along with daily treatment with Norditropin injection, NVO’s weekly use of Sogroya is expected to witness high demand in the future.
For its fiscal 2022 first quarter ended March 31, 2022, NVO’s net sales increased 24.3% year-over-year to DKK42.03 billion ($5.95 billion). The company’s operating income came in at DKK19.15 billion ($2.71 billion), up 27.8% from the year-ago period.
While its net income increased 12.6% year-over-year to DKK14.21 billion ($2.01 billion), its EPS increased 14.1% to DKK6.22. As of March 31, 2022, the company had DKK13.21 billion ($1.87 billion) in cash and cash equivalents).
Analysts expect the company’s EPS to grow 9.1% year-over-year to $3.36 for fiscal 2022 ending December 31, 2022. It surpassed Street EPS estimates in each of the trailing four quarters, which is impressive.
The consensus revenue estimate of $24.03 billion for the same fiscal year represents a 14.9% year-over-year improvement. NVO’s EPS is expected to grow at a 2% rate per annum over the next five years.
Over the past nine months, the stock has gained 13.6% and closed the last trading session at $108.30.
NVO’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system.
It has an A grade for Quality and a B grade for Value, Stability, and Sentiment. Click here to see the additional ratings for NVO’s Growth and Momentum.
NVO is ranked #3 in the Medical - Pharmaceuticals industry.
Vertex Pharmaceuticals Incorporated (VRTX)
VRTX develops, manufactures, and commercializes medicines for serious diseases. The company is focused on developing and commercializing therapies to treat cystic fibrosis (CF) and advancing its research and early-stage development programs.
It sells its products primarily to specialty pharmacies and specialty distributors in the United States and specialty distributors and retail chains and hospitals and clinics internationally.
On June 8, 2022, the FDA granted VRTX’s inaxaplin (VX-147) Breakthrough Therapy Designation for APOL1-mediated focal segmental glomerulosclerosis (FSGS), and the EMA has granted inaxaplin Priority Medicines (PRIME) designation for APOL1-mediated chronic kidney disease (AMKD).
This, being the ninth breakthrough therapy designation granted across its portfolio programs in the U.S., should help VRTX witness wide reach across the industry.
For its fiscal 2022 first quarter ended March 31, 2022, VRTX’s total revenues increased 21.6% year-over-year to $2.10 billion. The company’s non-GAAP operating income came in at $1.17 billion, representing a rise of 16.4% from the year-ago period.
VRTX’s non-GAAP net income came in at $907.10 million, indicating a 16.1% rise from the prior-year period. Its non-GAAP EPS increased 18.1% year-over-year to $3.52. The company had cash and cash equivalents of $7.60 billion as of March 31, 2022.
Analysts expect the company’s EPS to grow 9.1% year-over-year to $14.20 for fiscal 2022 ending December 31, 2022. It surpassed the consensus revenue estimates in each of the four trailing quarters, which is impressive.
The consensus revenue estimate of $8.58 billion for the same fiscal year represents a 13.3% year-over-year improvement. VRTX’s EPS is expected to grow at a rate of 10.9% per annum over the next five years.
Over the past nine months, the stock has gained 52.1% and closed the last trading session at $276.17.
VRTX’s POWR Ratings reflect its solid prospects. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system.
It has an A grade for Quality and a B for Sentiment, Value, and Growth. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for VRTX’s Momentum and Stability here.
VRTX is ranked #1 in the Biotech industry.
ABBV shares were trading at $154.83 per share on Wednesday afternoon, up $2.34 (+1.53%). Year-to-date, ABBV has gained 16.52%, versus a -19.34% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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