3 Pharmaceutical Stocks to Anchoring Your Portfolio

The pharmaceutical market is poised to thrive with continued medicinal advances to meet the growing demand for treatments for chronic diseases, technological advancements, and increased research and development. In this context, quality pharmaceutical stocks Procaps Group SA (PROC), Supernus Pharmaceuticals (SUPN) and GSK plc (GSK) could be wise additions to the portfolio now. Continue reading….

Thanks to the integration of cutting-edge technologies and the strong demand for new drugs for the treatment of chronic diseases, the pharmaceutical market has grown significantly. Furthermore, the industry’s stability lies in the persistent need for its products, which makes it less susceptible to economic volatility.

To this end, Procaps Group SA’s fundamentally strong pharmaceutical stocks (PROC), Supernus Pharmaceuticals, Inc. (SUPP) and GSK plc (GSK) they could be solid buys so far.

Despite the pharmaceutical industry’s enduring reputation for resilience in the context of the economic crisis, investment in pharmaceutical companies has declined over the past two years. However, the United States has gained a dominant share of the global pharmaceutical market thanks to increased US Food and Drug Administration (FDA) approvals. increase in chronic diseasesAND strong research and development capabilities.

In 2023, the FDA approved almost 50% more new drugs compared to 2022, bringing approval rates back to historic levels. According to Statista, the pharmaceutical market revenue in the United States is expected to generate the highest revenue 636.90 billion dollars in 2024.

Increasing tobacco use, alcohol consumption and obesity, along with air pollution, are key factors contributing to the rising incidence of cancer. Over 35 million new cancer cases are expected in 2050, a 77% increase. compared to an estimated 20 million cases in 2022. Given the rapidly increasing global burden of cancer, the global problem oncology drugs The segment is expected to be the largest in 2024.

Furthermore, the incorporation of cutting-edge technologies such as TO THE It has strengthened drug manufacturing and clinical trials and expanded the scope of the pharmaceutical market. THE Artificial intelligence in the pharmaceutical sector it is expected to reach $97.35 billion by 2030, growing at a CAGR of 29.2%.

Additionally, investor interest in pharmaceutical stocks is evident from the iShares US Pharmaceutical ETF (IHE) 18.1% returns over the last three months.

Considering these favorable trends, let’s take a look at the fundamentals of the three Medical – Pharmaceutical actions, starting from number 3.

Action no. 3: Procaps Group SA (PROC)

Headquartered in Luxembourg, PROC develops, manufactures and markets pharmaceutical solutions worldwide. Formulates, manufactures and markets branded prescription drugs in diverse therapeutic areas such as feminine hygiene products, pain relief, skin care, digestive health, cardiology, central nervous system and respiratory system.

On November 29, 2023, PROC and Genomma Lab Internacional, SAB de CV, the leading pharmaceutical and personal care company in Latin America, announced a strategic agreement to develop, manufacture and commercialize five Softgel products in Latin America. Through the partnership, PROC produces and Genomma markets and distributes the products. This should bode well for PROC.

PROC’s trailing 12-month asset turnover ratio of 0.85x is 119.7% higher than the industry average of 0.39x, while its trailing 12-month asset turnover ratio EBIT The margin of 11.77% is significantly higher than the industry average of 0.09%.

For the fiscal third quarter ended September 30, 2023, PROC’s revenue and gross profit increased 7.3% and 1.3% year-over-year to $118.41 million and $68.40 million, respectively of dollars. Additionally, its adjusted EBITDA amounted to $22 million.

For the same quarter, the company’s profit for the period attributable to owners and earnings per share were $8.19 million and $0.08, respectively.

Street expects PROC’s revenue for the fiscal year ending December 2024 to increase 8.5% year-over-year to $460.10 million. Its EPS is expected to be $0.28 for the same year. The company has surpassed consensus EPS estimates in each of the trailing four quarters, which is impressive.

The stock gained 9.5% over the past three months to close the latest trading session at $3.11.

The PROC’s strong outlook is reflected in its own POWR Ratings. The stock has an overall rating of B, equivalent to Buy in our proprietary rating system. POWR Ratings are calculated by considering 118 distinct factors, each optimally weighted.

The stock has a grade of B in terms of value, sentiment and quality. It is ranked 31st among 261 titles Medical – Pharmaceutical industry.

Click here for additional POWR ratings for PROC (Growth, Momentum, and Stability).

Action no. 2: Supernus Pharmaceuticals, Inc. (SUPP)

SUPN develops and markets products for the treatment of central nervous system (CNS) diseases in the United States. Its commercial products are Trokendi XR and Oxtellar XR. The company’s commercial products also include Qelbree, APOKYN, XADAGO, MYOBLOC, GOCOVRI and Osmolex ER. Additionally, its product candidates include SPN-830, SPN-817, and SPN-820.

SUPN’s trailing 12-month cash per share of $1.74 is 37.6% higher than the industry average of $1.26, while trailing 12-month EBIT margin of 4.31% is significantly higher than the industry average of 0.09%.

For the fiscal third quarter ended September 30, 2023, SUPN’s total revenues were $153.88 million, while adjusted operating earnings increased 46.9% year-over-year to $37.30 million, respectively . Additionally, its earnings before income taxes were $9.89 million, compared to a loss before income taxes of $444,000.

As of September 30, 2023, SUPN’s total current liabilities were $287.53 million, compared to $687.96 million as of December 31, 2022.

Street expects SUPN’s revenue for the fiscal year ending December 2024 to increase 4.1% year-over-year to $622.52 million. Its EPS is expected to be $1.80 for the same year. The company has surpassed consensus EPS estimates in each of the trailing four quarters.

The stock gained 6% over the past three months to close the latest trading session at $29.50. Over the past month it has gained 2.7%.

SUPN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.

SUPN is rated A for Value and B for Quality. Within the same industry, it is ranked 27th.

In addition to the above, we also evaluated the stock in terms of growth, momentum, stability and sentiment. Get all SUPN ratings Here.

Stock no. 1: GSK plc (GSK)

Headquartered in Brentford, UK, GSK researches, develops and manufactures vaccines and specialist medicines to prevent and treat diseases in the UK, US and internationally.

On February 15, GSK acquired Aiolos Bio (Aiolos), a clinical-stage biopharmaceutical company focused on addressing the unmet therapeutic needs of patients with respiratory and inflammatory conditions.

The Aiolos acquisition includes AIO-001, a potentially best-in-class, long-acting, anti-thymic stromal lymphopoietin (TSLP) monoclonal antibody ready to enter Phase II clinical development for the treatment of adult patients with asthma, which could expand GSK’s portfolio of respiratory biologics to potentially reach 40% of patients with severe asthma with low T2 inflammation.

It pays an annual dividend of $1.47 per share, which translates to a dividend yield of 3.46% on the current share price. Its four-year average return is 4.93%.

GSK’s trailing 12-month asset turnover ratio of 0.51x is 30.9% higher than the industry average of 0.39x, while its trailing 12-month EBIT margin of 26.09% is significantly higher than the industry average of 0.09%.

For the fiscal fourth quarter ended December 31, 2023, GSK’s revenue and adjusted gross profit increased 9.2% and 10.2% year-on-year respectively to £8.05 billion (£10.21 billion dollars) and 5.89 billion pounds (7.46 billion dollars). Its adjusted operating profit came in at £1.75 billion ($2.22 billion), up 9.8% from the same quarter a year earlier.

For the same quarter, adjusted earnings attributable to shareholders from continuing operations and adjusted earnings per share from continuing operations increased 12.7% and 12% from the prior-year quarter to £1.17 billion ($1.49 billion) and 28.90 pence, respectively.

Street expects GSK’s revenue and EPS for the fiscal first quarter ended March 2024 to increase 4.5% and 5.1% year-over-year to $9.05 billion and $0.96, respectively. The company beat consensus revenue estimates in each of the trailing four quarters and consensus EPS estimates in three of the trailing four quarters.

The stock gained 23.7% over the past nine months to close the latest trading session at $42.34. In the last year it has gained 22.5%.

GSK’s POWR Ratings reflect its positive outlook. The stock has an overall rating of A, equivalent to Strong Buy in our proprietary rating system.

GSK is graded A for Value and B for Stability and Quality. In the same sector it is in third place.

To view additional POWR ratings for growth, momentum and sentiment for GSK, Click here.

What to do next?

Steve Reitmeister, a 43-year investing veteran, just released his 2024 market outlook along with his trading plan and 11 top picks for the year ahead.

Stock Market Outlook 2024 >


GSK shares rose $0.01 (+0.02%) in pre-market trading Tuesday. Year to date, GSK has gained 15.34%, compared to a 6.45% gain in the benchmark S&P 500 index over the same period.


About the author: Neha Panjwani

Since her school days, Neha had a deep fascination for finance, a passion that pushed her towards a career as an investment analyst after completing her bachelor’s degree in commerce. Currently enrolled in the CFA program, Neha is dedicated to further enriching her understanding of investment fundamentals. Neha’s primary focus is to help retail investors identify optimal investment opportunities by diligently evaluating crucial aspects of financial instruments, with a focus on stocks and ETFs. She is committed to empowering people to make informed and strategic investment decisions in the dynamic world of finance.

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