COVID-19 continues to have a significant impact on the pharmaceutical industry. Vaccines are expected to increase the net cumulative pharmaceutical market to $500 billion by 2027. As per the report from IQVIA Institute, total spending and global demand for medicines could reach approximately $1.90 trillion over the next five years.
The pharmaceutical industry has continually adopted new strategies and developed advanced technologies through research and development to meet its ever-growing demand. It is estimated to surpass $1 trillion by 2023 due to numerous compounds in the latter stages of clinical trials and many more waiting for approvals.
Moreover, healthcare companies' products and services have inelastic demand, making them ideal holdings during economic volatility. Therefore, investing long-term in fundamentally strong pharma stocks AstraZeneca PLC (AZN), Bristol-Myers Squibb Company (BMY), and GSK plc (GSK) could be wise.
AstraZeneca PLC (AZN)
Headquartered in Cambridge, the United Kingdom, AZN is a biopharmaceutical company that develops, manufactures, and markets pharmaceutical products. It serves primary care and specialty care physicians through distributors and local representatives.
On January 16, 2023, AZN acquired Neogene Therapeutics Inc., a global clinical-stage biotechnology firm pioneering the discovery, development, and production of next-generation T-cell receptor therapies (TCR-Ts). Neogene's experience with TCR-T could support AZN's objective of improving patient outcomes.
Also, on January 9, AZN entered into a definitive agreement to acquire CinCor Pharma, Inc. (CINC), a clinical-stage biopharmaceutical business focused on developing novel treatments for chronic kidney disease along with resistant and uncontrolled hypertension.
With the addition of CINC's candidate drug, baxdrostat (CIN-107), an aldosterone synthase inhibitor (ASI) for blood pressure management in treatment-resistant hypertension, the acquisition should strengthen AZN's cardiorenal pipeline.
For the fiscal third quarter that ended September 30, 2022, AZN’s total revenue grew 11.3% year-over-year to $10.98 billion. Its gross profit rose 31% from the prior year’s period to $8 billion. The company’s EBITDA stood at $2.58 billion, up 131.5% year-over-year.
In addition, AZN’s profit for the period and EPS stood at $1.64 billion and $1.05 as compared to a loss and loss per share of $1.65 billion and $1.10 in the prior year’s quarter, respectively.
AZN pays a $0.93 per share dividend annually, which translates to a 1.42% yield on the current price level. Its four-year average dividend yield is 2.68%.
The consensus revenue estimate of $44.44 billion for the fiscal year that ended December 2022 indicates an 18.8% year-over-year improvement. The consensus EPS estimate of $4.02 for the same year reflects a rise of 52% from the prior year.
In addition, the consensus revenue and EPS estimate of $46.52 billion and $4.45 for the current fiscal year (ending December 2023) indicates 4.7% and 10.6% year-over-year improvements, respectively. Shares of AZN have gained 10.2% over the past year to close the last trading session at $63.56.
AZN’s POWR Ratings reflect its promising outlook. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Growth and Sentiment. In the 171-stock Medical - Pharmaceuticals industry, it is ranked #15.
Beyond what we stated above, we also have AZN’s ratings for Value, Momentum, Quality, and Stability. Get all AZN ratings here.
Bristol-Myers Squibb Company (BMY)
BMY is involved in the discovery, development, licensing, manufacture, marketing, distribution, and sale of biopharmaceutical products. It sells its products to wholesalers, distributors, retailers, pharmacies, hospitals, government agencies, and clinics.
On January 27, 2023, BMY announced that the European Medicines Agency's Committee for Medicinal Products for Human Use (CHMP) had recommended approval of Reblozyl® (luspatercept) as a therapy for adult patients with anemia caused by non-transfusion-dependent (NTD) beta-thalassemia.
The prospective approval of Reblozyl for patients with non-transfusion-dependent beta thalassemia marks a significant development in the European Union. BMY intends to benefit from this initiative by improving patient care.
Moreover, on January 3, BMY completed the previously announced sale of its Syracuse, New York manufacturing site to LOTTE BIOLOGICS. The sale is a part of BMY's ongoing efforts to enhance its production infrastructure to support its product portfolio.
The company’s total U.S. revenues grew 5.4% year-over-year to $7.93 billion in the fiscal fourth quarter that ended December 31, 2022, while its total expenses reduced 5.7% year-over-year to $9.55 billion. The company’s earnings before income taxes rose marginally from the year-ago value to $1.86 billion.
Moreover, as of December 31, 2022, BMY’s long-term debt stood at $35.06 billion compared to $39.61 billion on December 31, 2021.
BMY has raised its dividends for six consecutive years. It pays a $2.28 per share dividend annually, which translates to a 3.14% yield on the current price level. The company’s dividend payments have grown at a 9.2% CAGR over the past three years, and its four-year average dividend yield is 3.02%.
Analysts expect BMY’s revenue and EPS to increase 2.8% and 4.8% year-over-year to $47.18 billion and $7.98, respectively, for the current fiscal year ending December 2023. Moreover, BMY surpassed its consensus estimates in all four trailing quarters. The stock has gained 9.3% over the past year to close the last trading session at $71.23.
BMY’s strong fundamentals are apparent in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
BMY has an A grade for Value and a B for Quality, Stability, and Sentiment. Within the Medical - Pharmaceuticals industry, it is ranked #3 of 171 stocks.
In addition to the POWR Ratings I’ve just highlighted, you can see BMY ratings for Growth and Momentum here.
GSK plc (GSK)
GSK, headquartered in Brentford, United Kingdom, creates, discovers, develops, manufactures, and markets pharmaceutical products, vaccines, over-the-counter medicines, and health-related consumer items globally. Its segments include Pharmaceuticals; Pharmaceuticals R&D; Vaccines; and Consumer Healthcare.
On December 13, 2022, GSK and Wave Life Sciences Ltd. (WVE), a clinical-stage genetic medicines company, entered into a strategic collaboration to promote oligonucleotide treatments, including WVE's preclinical RNA editing program, WVE-006. The agreement would enable GSK to leverage its leadership in human genetics and genomics to develop innovative oligonucleotide treatments.
Also, on October 18, GSK and Tempus, a precision medicine company based in the United States, signed a three-year collaboration deal that would give GSK access to Tempus' AI-enabled platform, including its library of de-identified patient data.
GSK is collaborating with Tempus to enhance clinical trial design, expedite enrollment, and find therapeutic targets using its industry-leading Artificial Intelligence and Machine Learning capacity. This should increase GSK's R&D success rate and enable faster delivery of more personalized care for patients.
For the fiscal 2022 fourth quarter that ended December 31, GSK’s adjusted turnover increased 4.2% year-over-year to £7.38 billion ($9.14 billion), and its adjusted gross profit grew 19.2% year-over-year to £5.35 billion ($6.62 billion). Its adjusted operating profit rose 21% from the year-ago value to £1.60 billion ($1.98 billion).
Moreover, the company’s adjusted total profit after taxation and adjusted EPS came in at £1.19 billion ($1.47 billion) and 25.8p, up 13% and 9.3% from the prior year’s quarter, respectively.
GSK pays a $1.68 per share dividend annually, which translates to a 4.75% yield on the current price level. Its four-year average dividend yield is 5.19%.
The consensus revenue estimate of $35.92 billion for the ongoing fiscal year (ending December 2023) indicates a marginal improvement from the previous year. Likewise, the EPS estimate of $3.61 for the current year indicates a 6.2% year-over-year improvement. Furthermore, GSK surpassed its consensus EPS in three trailing quarters, which is impressive.
Shares of GSK have gained marginally intraday to close the last trading session at $35.49.
GSK’s POWR Ratings reflect its solid prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
The stock has an A grade for Value and a B for Quality and Sentiment. Within the same industry, it is ranked #14 of 171 stocks.
To see additional POWR Ratings for Stability, Growth, and Momentum for GSK, click here.
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AZN shares were trading at $62.62 per share on Thursday morning, down $0.94 (-1.48%). Year-to-date, AZN has declined -7.64%, versus a 8.03% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
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