The pharma industry has thrived amid solid demand and an unprecedented need for COVID-19 vaccines and therapeutics. Moreover, the industry is expanding with new modalities, such as cell and gene therapy and mRNA vaccine technology, new supply chains, and changing product landscape.
So, investing in fundamentally strong pharma stocks Eli Lilly and Company (LLY), Takeda Pharmaceutical Company Limited (TAK), Catalyst Pharmaceuticals, Inc. (CPRX), Poseida Therapeutics, Inc. (PSTX), and Voyager Therapeutics, Inc. (VYGR) could be worth now.
The pharmaceutical industry is expected to increase to $1.50 trillion by this year. This is partly due to thousands of compounds currently in the latter stages of clinical development, coupled with hundreds of new products with approvals anticipated in 2023 and beyond.
In addition, the pharma sector is advancing with ePharmacy and personalized medicines. The global personalized medicine market is expected to expand at a CAGR of 7% until 2030.
On the other hand, rising penetration of the internet across the globe, improving digitalization of healthcare services, and an increasing number of tech-savvy consumers are the key factors boosting the growth of ePharmacy. The global ePharmacy market is expected to expand at a CAGR of 19.5% until 2030.
Let’s discuss the stocks mentioned above in detail:
Eli Lilly and Company (LLY)
LLY discovers, develops, and markets human pharmaceuticals worldwide. Its products are sold in about 120 countries.
On March 3, LLY announced that the U.S. Food and Drug Administration approved an expanded indication for Verzenio, in combination with endocrine therapy, for the adjuvant treatment of adult patients with hormone receptor-positive (HR+), human epidermal growth factor receptor 2-negative (HER2-), node-positive, early breast cancer at a high risk of recurrence.
This approval marks a significant achievement for the company.
LLY’s trailing-12-month Asset Turnover Ratio of 0.58x is 69.4% higher than the 0.34x industry average. Its trailing-12-month gross profit margin of 76.77% is 38.4% higher than the 55.48% industry average.
LLY pays $4.52 annually as dividends. This translates to a yield of 1.46% at the current price, compared to its four-year average dividend yield of 1.62%. Its dividend payments have grown at a CAGR of 15% over the past three years.
LLY’s revenue came in at $7.30 billion in the fourth quarter, which ended in December 2022. The company’s net income increased 12.3% year-over-year to $1.94 billion, while its EPS rose 12.6% year-over-year to $2.14.
Analysts expect LLY’s revenue for the fiscal year ending December 2023 to increase 7.4% year-over-year to $30.66 billion. The company’s EPS for the same year is expected to increase 6.9% year-over-year to $8.49. Additionally, it has topped consensus EPS estimates in three of the trailing four quarters.
The stock has gained 20.2% over the past year to close the last trading session at $312.54.
LLY’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
LLY also has a B grade for Stability and Quality. It is ranked #31 among 169 stocks in the Medical – Pharmaceuticals industry.
To access additional ratings for LLY for Growth, Momentum, Value, and Sentiment, click here.
Takeda Pharmaceutical Company Limited (TAK)
Headquartered in Tokyo, Japan, TAK engages in the research, development, manufacture, marketing, and out-licensing of pharmaceutical products in Japan, the United States, Europe, Canada, Latin America, Russia, the rest of Asia, and internationally. It offers pharmaceutical products in gastroenterology, rare diseases, plasma-derived therapies, oncology, and neuroscience.
On February 8, TAK announced that it had completed the acquisition of all shares of Nimbus Lakshmi, Inc. from Nimbus Therapeutics, LLC, as set forth in the share purchase agreement, following clearance from the United States Federal Trade Commission and satisfaction of other closing conditions. This acquisition should enhance its capabilities.
TAK’s trailing-12-month EBITDA margin of 27.97% is 685.2% higher than the 3.56% industry average. Its trailing-12-month gross profit margin of 67.81% is 22.2% higher than the 55.48% industry average.
TAK’s forward annual dividend of $0.66 yields 4.20% on the current price level. Its four-year average yield is 4.26%. Its dividend payments have grown at a CAGR of 17.1% over the past three years.
During the nine months that ended December 31, 2022, TAK’s revenue increased 13.9% year-over-year to ¥3.07 trillion ($22.36 billion). Its net profit for the period grew 18.37% year-over-year to ¥285.90 billion ($2.08 billion), while its earnings per share came in at ¥182.65, an increase of 19.36% year-over-year.
Street expects TAK’s revenue and EPS for the fiscal year ending March 2023 to increase 394.8% and 18.8% year-over-year to $29.1 billion and $0.67, respectively. Also, the company has topped the consensus revenue estimates in each of the trailing four quarters, which is impressive.
The stock has gained 16.2% over the past six months, closing the last trading session at $15.69.
TAK has an overall rating of A, which translates to a Strong Buy in our POWR Ratings system.
The stock has an A grade for Value and Stability and a B for Growth. It is ranked #6 in the same industry.
Access additional TAK grades for Sentiment, Momentum, and Quality here.
Catalyst Pharmaceuticals, Inc. (CPRX)
CPRX, a commercial-stage biopharmaceutical company, focuses on developing and commercializing therapies for people with rare debilitating, chronic neuromuscular, and neurological diseases.
On January 25, CPRX announced that it had successfully completed the acquisition of the U.S. rights for FYCOMPA CIII from Eisai Co., Ltd. The closing of the acquisition provides CPRX with an increased U.S. commercial presence in neurology and an expanded product portfolio with an established, first-in-class, commercial-stage epilepsy asset.
“The completion of the acquisition of U.S. rights to FYCOMPA marks an important step in the expansion and diversification of our portfolio of marketed products, adds a second complementary commercial product that will further strengthen CPRX’s financial position through increased revenue scale, and is expected to be accretive to EBITDA and EPS in 2023,” said Patrick J. McEnany, Chairman and CEO of CPRX.
CPRX’s trailing-12-month Asset Turnover Ratio of 0.69x is 101.1% higher than the 0.34x industry average. Its trailing-12-month gross profit margin of 73.28% is 32.1% higher than the 55.48% industry average.
For the fiscal 2022 third quarter ended September 30, 2022, CPRX’s total revenue increased 59.2% year-over-year to $57.24 million. Its non-GAAP net income increased 83.3% year-over-year to $28.62 million, while its non-GAAP net income per share increased 85.7% year-over-year to $0.26.
CPRX’s revenue is expected to rise 58.3% year-over-year to $60.64 million for the fiscal fourth quarter ended December 2022. The company’s EPS for the same quarter is expected to increase 135.6% year-over-year to $0.21.
Shares of CPRX have gained 120.4% over the past nine months to close the last trading session at $15.34.
CPRX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
The stock has a B grade for Growth, Quality, and Value. Within the same industry, it is ranked #24.
Beyond what is stated above, we’ve also rated CPRX for Stability, Sentiment, and Momentum. Get all CPRX ratings here.
Poseida Therapeutics, Inc. (PSTX)
PSTX, a clinical-stage biopharmaceutical company, focuses on developing therapeutics for patients with high unmet medical needs. The company develops P-PSMA-101, an autologous chimeric antigen receptor T cell product candidate that is in Phase I trial to treat patients with metastatic castrate-resistant prostate cancer.
On December 11, PSTK announced that the company would present preclinical data from its P-FVIII-101 gene therapy program, partnered with Takeda (TAK), at the 2022 American Society of Hematology (ASH) Annual Meeting being held in New Orleans and virtually.
The data establish preclinical proof of principle for treating Hemophilia A using P-FVIII-101. This product candidate might garner solid returns in the near term.
PSTX’s trailing-12-month Asset Turnover Ratio of 0.47x is 37.8% higher than the 0.34x industry average. Its trailing-12-month gross profit margin of 85.91% is 54.7% higher than the 55.48% industry average.
PSTX total revenue came in at $116.31 million in the third quarter that ended September 30, 2022. Its net income came in at $70.41 million, compared to a loss of $42.42 million in the previous-year quarter. Also, its net income per share came in at $0.92, compared to a negative $0.68 in the previous-year quarter.
The consensus EPS estimate for the fiscal fourth quarter that ended December 2022 of $0.29 reflects a significant rise year-over-year. Its revenue estimate for the same quarter of $31.75 million indicates an improvement of 1.6% from the prior-year quarter. Additionally, PSTX has topped consensus revenue estimates in each of the trailing four quarters.
The stock has gained 106.8% over the past nine months to close the last trading session at $5.44.
PSTX’s robust prospect is reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
PSTX has an A grade for Growth and a B for Value, Sentiment, and Quality. It is ranked #8 in the same industry.
Click here for the additional POWR Ratings for PSTX (Momentum and Stability).
Voyager Therapeutics, Inc. (VYGR)
VYGR, a gene therapy company, focuses on developing treatments and next-generation platform technologies. The company’s lead clinical candidate is the VY-AADC, which is in an open-label Phase 1 clinical trial for treating Parkinson’s disease.
On March 6, VYGR announced that Novartis AG (NVS) had exercised its options to license novel capsids generated from VYGR’s TRACER capsid discovery platform for use in gene therapy programs against two undisclosed neurologic disease targets. Such collaboration with a leader in gene therapy should be beneficial for VYGR.
VYGR’s trailing-12-month Asset Turnover Ratio of 0.38x is 13.1% higher than the 0.34x industry average.
During the fiscal year that ended December 31, 2022, VYGR’s collaboration revenue increased 9.3% year-over-year to $40.91 million. The company’s total other income increased 83.6% year-over-year to $4.45 million, and its net loss decreased 34.8% year-over-year to $46.41 million.
VYGR’s revenue is expected to rise significantly year-over-year to $53.27 million for the fiscal quarter ending March 2023. The company’s EPS is expected to be $0.88 for the same quarter.
VYGR’s shares have gained 55.2% over the past year to close its last trading session at $8.13.
It’s no surprise that VYGR has an overall B rating, which equates to a Buy in our POWR Ratings system.
VYGR has a B grade for Value and Quality. The stock is ranked #32 in the same industry.
To access VYGR’s grades for Momentum, Growth, Sentiment and Stability, click here.
What To Do Next?
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What gives these stocks the right stuff to become big winners, even in this brutal stock market?
First, because they are all low-priced companies with the most upside potential in today’s volatile markets.
But even more important is that they are all top Buy rated stocks according to our coveted POWR Ratings system, and they excel in key areas of growth, sentiment and momentum.
Click below now to see these 3 exciting stocks that could double or more in the year ahead.
LLY shares fell $3.54 (-1.13%) in premarket trading Thursday. Year-to-date, LLY has declined -14.29%, versus a 4.31% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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