The pharmaceutical industry is predicted to grow rapidly in the coming years, owing to rising worldwide medical needs and technological advancements. Chronic diseases, an aging population, and rising markets in developing nations are all expected to drive the pharmaceutical industry ahead.
Therefore, it could be wise to own fundamentally strong pharma stocks Kamada Ltd. (KMDA), Hypera S.A. (HYPMY), Eli Lilly and Company (LLY) and Sanofi (SNY).
Before delving deeper into their fundamentals, let’s discuss what’s happening in the pharma industry.
Generative AI is transforming the pharmaceutical sector by speeding up drug development, improving clinical trials, streamlining regulatory approvals, and creating customized marketing and medicinal materials. According to McKinsey Global Institute, technology could generate $60 billion to $110 billion annually in the pharmaceutical and medical-product industries by expediting medication discovery, development, approval, and marketing.
The pharmaceutical sector is embracing Pharma 4.0 technology, which focuses on interconnectivity, big data analytics, AI, collaborative robotics, and distributed cloud-based service architectures. This shift aims towards connected, efficient, and agile production that saves time and money. The global pharma 4.0 market is expected to reach $54.43 billion by 2031, increasing at an 18.3% CAGR.
The worldwide pharmaceutical market is expected to reach $1.47 trillion by 2028, exhibiting a CAGR of 6.2%. In addition, investors’ interest in pharmaceutical stocks is evident from the VanEck Pharmaceutical ETF’s (PPH) 15.2% returns over the past three months.
Considering these conducive trends, let’s take a look at the fundamentals of the four best Medical - Pharmaceuticals stocks, starting with number four.
Stock #4: Kamada Ltd. (KMDA)
Based in Rehovot, Israel, KMDA provides plasma-derived protein therapeutics. It operates in two segments: Proprietary Products and Distribution.
KMDA’s trailing-12-month EBITDA margin of 15.05% is 170% higher than the industry average of 5.57%. Its 7.46% trailing-12-month EBIT margin is significantly higher than the 0.16% industry average.
For the fiscal third quarter that ended September 30, 2023, KMDA’s total revenues increased 17.7% year-over-year to $37.93 million. Its gross profit increased 15% over the prior year quarter to $14.80 million. In addition, adjusted EBITDA grew 31.4% year-over-year to $7.86 million.
Also, its net income increased 565.9% over the prior year quarter to $3.22 million. In addition, its EPS came in at $0.06, registering an increment of 500% year-over-year.
Analysts expect KMDA’s revenue to come in at $167.93 million for the year ending December 2024, up 15.5% year-over-year. Its EPS is expected to grow 133.3% year-over-year to $0.28 for the same period. It surpassed the consensus EPS estimates in three out of the trailing four quarters. The stock has gained 51.7% over the past year to close the last trading session at $6.40.
KMDA’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
KMDA has a B grade for Value and Sentiment. Within the Medical - Pharmaceuticals industry, it is ranked #40 out of 164 stocks. To see additional POWR Ratings for Growth, Stability, Momentum and Quality for KMDA, click here.
Stock #3: Hypera S.A. (HYPMY)
HYPMY, formerly Hypermarcas SA, is a Brazil-based company engaged in the pharmaceuticals sector. The Company’s major business units include Branded Prescription, Consumer Health and Branded Generics.
HYPMY’s trailing-12-month CAPEX / Sales of 6.35% is 54.7% higher than the 4.11% industry average. Its trailing-12-month EBITDA margin of 33.16% is 495.1% higher than the 5.57% industry average.
HYPMY’s net revenue for the fiscal third quarter ended September 30, 2023, increased 5% year-over-year to R$2.14 billion ($433.44 million). Its gross profit increased 4.8% over the prior year quarter to R$1.35 billion ($274.40 million). The company’s income for the period increased 7.1% year-over-year to R$499.27 million ($101.24 million). Also, its EPS came in at R$0.79, representing an increase of 8.2% year-over-year.
The consensus revenue came in at $1.78 billion for the fiscal year ending December 2024, represents a 9.6% increase year-over-year. HYPMY’s shares have gained 4.7% over the past month to close the last trading session at $6.95.
It’s no surprise that HYPMY has an overall B rating, equating to a Buy in our POWR Ratings system. It has a B grade for Value. It is ranked #39 in the same industry.
Beyond what is stated above, we’ve also rated HYPMY for Growth, Stability, Sentiment, Momentum and Quality. Get all HYPMY ratings here.
Stock #2: Eli Lilly and Company (LLY)
LLY is a global pharmaceutical company known for discovering, developing, and marketing a wide range of human pharmaceuticals worldwide. Its diverse product portfolio includes treatments for diabetes, cancer, autoimmune diseases, mental health disorders, and COVID-19.
On January 4, 2024, LLY launched LillyDirect, a cutting-edge digital healthcare platform designed for Americans suffering from obesity, diabetes, and migraines. It provides disease management resources such as access to independent medical professionals, tailored support, and direct home delivery of certain LLY drugs via third-party pharmacy dispensing services.
This revolutionary platform intends to give patients convenient and comprehensive care in order to better manage their health.
LLY’s trailing-12-month EBIT margin of 31.61% is significantly higher than the industry average of 0.16%. Its 36.09% trailing-12-month EBITDA margin is 547.7% higher than the 5.57% industry average.
For the fourth quarter that ended December 31, 2023, LLY generated revenue of $9.35 billion, up 28.1% year-over-year. The company’s operating income increased 30% from the prior-year quarter to $2.39 billion. Its non-GAAP net income and EPS stood at $2.25 billion and $2.49, up 18.8% and 19.1% year-over-year, respectively.
LLY’s revenue is expected to increase 21.1% year-over-year to $41.32 billion for the year ending December 2024. Its EPS is expected to grow 98.1% year-over-year to $12.52 for the same period. It surpassed the consensus EPS estimates in three out of the trailing four quarters. Over the past year, the stock has gained 141.6% to close the last trading session at $765.
LLY’s overall B rating equates to a Buy in our POWR Ratings system. It has a B grade for Growth, Sentiment and Quality. The stock is ranked #30 in the same industry. We’ve also rated LLY for Value, Stability and Momentum. Get all LLY ratings here.
Stock #1: Sanofi (SNY)
Headquartered in Paris, France, SNY is a healthcare company that engages in the research, development, manufacture, and marketing of therapeutic solutions internationally. It operates through Pharmaceuticals, Vaccines, and Consumer Healthcare segments.
On February 16, 2024, SNY announced that Japan had approved Dupixent® for chronic spontaneous urticaria (CSU), becoming the first country to do so. This represents Dupixent's fifth approval in Japan and sixth globally, with Phase 3 study findings indicating a substantial itch reduction against placebo, providing a new therapy option for CSU patients.
SNY’s trailing-12-month gross profit margin of 69.12% is 20.6% higher than the industry average of 57.33%. Its trailing-12-month EBIT margin of 19.99% is significantly higher than the industry average of 0.16%.
During the fiscal year that ended December 31, 2023, SNY’s net sales rose marginally year-over-year to €43.07 billion ($46.68 billion). Its gross profit rose 1.6% from the year-ago value to €32.21 billion ($34.91 billion).
Also, the company’s net income attributable to SNY and EPS came in at €5.40 billion ($5.85 billion) and €4.31 per share, respectively.
Street expects SNY’s revenue for the year ending December 31, 2024, to increase 7.4% year-over-year to $50.29 billion. Its EPS is expected to come in at $4.23 for the same period. Shares of SNY have gained marginally over the past three months to close the last trading session at $48.21.
SNY has an overall B rating, equating to a Buy in our POWR Ratings system.
SNY’s is ranked #18 in the same industry. It has an A grade for Stability and a B for Value. To see additional SNY’s ratings for Sentiment, Growth, Momentum and Quality, click here.
What To Do Next?
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LLY shares were trading at $752.65 per share on Wednesday morning, down $12.35 (-1.61%). Year-to-date, LLY has gained 29.34%, versus a 6.60% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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