The pharma industry is expected to experience substantial growth in the coming years with expanding global medical needs. Also, the demand for innovative and personalized medicine is driving the expansion of the pharma industry.
So, I think pharma stocks Pfizer Inc. (PFE), Catalyst Pharmaceuticals, Inc. (CPRX), and Kiniksa Pharmaceuticals, Ltd. (KNSA) could be worth adding to your watchlist.
The global pharmaceutical market is expected to reach $1.48 trillion by 2028, exhibiting a CAGR of 5.8%. The industry’s largest segment is oncology drugs, with a projected market volume of $188.20 billion in 2023.
In addition, the global AI in pharma market is expected to reach a value of $4.61 billion by 2027, at a CAGR of 29.4%. AI solutions are being used by pharma companies for quality control, predictive maintenance, waste reduction, design optimization, and process automation.
Investors’ interest in pharma stocks is evident from SPDR S&P Pharmaceuticals ETF (XPH) 10.7% returns over the past three months.
In light of these encouraging trends, let's look at the fundamentals of the three Medical – Pharmaceuticals stocks, beginning with number 3.
Stock #3: Pfizer Inc. (PFE)
PFE discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. It offers medicines and vaccines in various therapeutic areas, infectious diseases, COVID-19 prevention and treatment, etc.
On July 28, 2023, PFE and OPKO Health Inc. (OPK) announced that NGENLA (somatrogon-ghla) had been approved by the US Food and Drug Administration (FDA). This novel drug is a human growth hormone mimic that is taken once a week.
It is designed to treat pediatric children aged three and up who are experiencing growth failure due to insufficient endogenous growth hormone secretion. NGENLA is expected to be available for prescription in the United States beginning this month, providing a new way to address this medical condition.
PFE’s forward EV/EBIT multiple of 10.81 is 36.3% lower than the industry average of 16.97. Its forward EV/EBITDA multiple of 9.35 is 28.2% lower than the industry average of 13.03.
PFE’s trailing-12-month levered FCF margin of 15.85% is significantly higher than the industry average of 0.04%. Its trailing-12-month EBIT margin of 32.53% is significantly higher than the industry average of 0.24%.
For the second quarter, which ended June 30, 2023, PFE’s total revenues amounted to $12.73 billion. During the same period, the company’s adjusted net income and adjusted EPS came in at $3.84 billion and $0.67, respectively.
The consensus revenue estimate of $66.54 billion for the year ending December 2024 represents a marginally increase year-over-year. Its EPS is expected to grow 3.9% year-over-year to $3.43 for the same period. It surpassed EPS estimates in all four trailing quarters. PFE’s shares have gained marginally over the past month to close the last trading session at $36.21.
PFE’s POWR Ratings reflect this promising outlook. The stock has an overall C rating, translating to a Neutral in our proprietary system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
PFE has a B grade for Value. Within the Medical – Pharmaceuticals industry, it is ranked #63 out of 160 stocks. Click here for the additional POWR Ratings for Growth, Quality, Stability, Sentiment, and Momentum for PFE.
Stock #2: 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.
CPRX’s forward EV/Sales multiple of 3.45 is 1.3% lower than the industry average of 3.50. Its forward EV/EBIT multiple of 10.62 is 37.6% lower than the industry average of 17.02.
CPRX’s trailing-12-month EBIT margin of 45.62% is significantly higher than the 0.24% industry average. Its trailing-12-month EBITDA margin of 51.01% is significantly higher than the 5.23% industry average.
In the fiscal second quarter that ended June 30, 2023, CPRX’s total revenue increased 87.5% year-over-year to $99.58 million. Its non-GAAP net income increased 99.2% year-over-year to $60.38 million, while its non-GAAP net income per share increased 91.5% year-over-year to $0.53.
Street expects CPRX’s revenue to increase 81.7% year-over-year to $389.17 million for the year ending December 2023. Its EPS is expected to grow 21.3% year-over-year to $0.91 for the same period. It has surpassed EPS estimates in all four trailing quarters. Over past three months the stock has gained 23.6% to close the last trading session at $14.21.
CPRX has an overall C rating, translating to a Neutral in our POWR Ratings system. It is ranked #62 in the same industry. It has a B grade for Value and Quality. To see additional CPRX’s ratings for Growth, Stability, Momentum and Sentiment, click here.
Stock #1: Kiniksa Pharmaceuticals, Ltd. (KNSA)
Based in Hamilton, Bermuda. KNSA is a biopharmaceutical company that focuses on discovering, acquiring, developing, and commercializing therapeutic medicines for patients suffering from debilitating diseases with significant unmet medical needs worldwide.
Its trailing-12-month P/E multiple of 5.33 is 82.4% lower than the industry average of 30.31.
KNSA’s trailing-12-month EBITDA margin of 14.39% is 175.2% higher than the industry average of 5.23%. Its trailing-12-month asset turnover ratio of 0.81x is 114.4% higher than the 0.38x industry average.
KNSA’s total revenue increased 165% year-over-year to $71.47 million in the second quarter that ended June 30, 2023. Its net income came in at $14.97 million, compared to net loss of $19.98 million for the same period. Also, its EPS came in at $0.21, compared to loss per share of $0.29.
Analysts expect KNSA’s revenue to increase 16.2% year-over-year to $255.92 million for the year ending December 2023. The stock has gained 40.8% over the past year to close the last trading session at $17.21.
KNSA has an overall C rating, equating to a Neutral in our POWR Ratings system. KNSA has an A grade for Value and a B grade for Sentiment and Quality. It is ranked #41 in the same industry.
Beyond what is stated above, we’ve also rated KNSA for Growth, Momentum and Stability. Get all KNSA ratings here.
What To Do Next?
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PFE shares were trading at $36.22 per share on Tuesday morning, up $0.01 (+0.03%). Year-to-date, PFE has declined -27.09%, versus a 17.40% 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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