Despite the global logistical bottlenecks, the pharmaceutical sector has produced significant revenues over the past year across various segments, including diagnostics, research, and healthcare. Also, an aging, global population is generating rising demand for pharma products. According to a report from IQVIA, the global pharmaceutical market could surpass $1.5 trillion by 2023. Also, the U.S. is expected to spend more than $600 billion on drugs in 2023.
Increasing pharma business collaborations and an increasing number of bio-medical trials are expected to contribute to the global pharma sector’s growth. Investors' interest in the pharmaceutical industry is evident from the VanEck Vectors Pharmaceutical ETF's (PPH) 8.2% returns over the past six months.
Given this backdrop, we think it could be wise to scoop up the shares of fundamentally sound pharmaceutical stocks, Bristol-Myers Squibb Company (BMY), Bayer Aktiengesellschaft (BAYRY), and Catalyst Pharmaceuticals, Inc. (CPRX), which are currently trading at considerable discounts to their peers.
Click here to checkout our Healthcare Sector Report for 2022
Bristol-Myers Squibb Company (BMY)
New York City-based BMY explores, develops, licenses, manufactures, and markets biopharmaceutical products internationally. It renders products for hematology, oncology, cardiovascular, immunology, fibrotic, neuroscience, and Covid-19 diseases.
In April, BMY announced results from the Phase 3 CheckMate-816 trial, which showcased that neoadjuvant treatment with three cycles of Opdivo (nivolumab) combined with chemotherapy considerably improved event-free survival (EFS), a primary endpoint, compared to chemotherapy alone in patients with resectable non-small cell lung cancer (NSCLC). With a minimum follow-up of 21 months, Opdivo with chemotherapy decreased the risk of disease recurrence, progression, or death by 37% (Hazard Ratio [HR] 0.63; 97.38% Confidence Interval [CI]: 0.43 to 0.91; p=0.0052) across randomized patients when administered before surgery.
BMY's 10.11x forward non-GAAP P/E is 47.4% lower than the 19.21x industry average. And its 3.53x forward Price/Sales is also 18.7% lower than the 4.34x industry average.
For the three months ended March 31, 2022, BMY's total revenue increased 4.7% year-over-year to $11.31 billion. Its non-GAAP gross profit improved 6.7% year-over-year to $9.23 billion, its non-GAAP net earnings amounted to $4.25 billion, while its non-GAAP EPS increased 12.6% from its prior-year quarter to $1.96.
Analysts expect BMY's revenue to increase 0.4% year-over-year to $46.56 billion for its fiscal 2022. The company's EPS is expected to grow 1.6% year-over-year to $7.36 for its fiscal 2022. Furthermore, it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters. The company's shares have soared 23.7% in price year-to-date and 35.8% over the past six months.
BMY's POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
BMY is also rated an A grade for Value and a B for Quality and Growth. Within the Medical - Pharmaceuticals industry, it is ranked #5 of 166 stocks.
To see additional POWR Ratings for Momentum, Stability, and Sentiment for BMY, click here.
Bayer Aktiengesellschaft (BAYRY)
Headquartered in Leverkusen, Germany, BAYRY functions worldwide as a life science company. It operates through Pharmaceuticals; Consumer Health; and Crop Science segments.
BMY's 8.78x forward non-GAAP P/E is 54.3% lower than the 19.21x industry average. Its 2.04x forward EV/Sales is 44.6% lower than the 3.69x industry average.
BAYRY's net sales increased 18.7% year-over-year to €14.64 billion ($14.64 billion) for the first quarter, ending March 31, 2022. Its EBIT grew 36.7% from its year-ago value to €4.21 billion ($4.51 billion), while its net income improved 57.5% from its prior-year quarter to €3.29 billion ($3.52 billion). The company's EPS rose 57.3% year-over-year to €3.35.
The $0.32 consensus EPS estimate for the third quarter, ending Sept. 30, 2022, represents 4.6% year-over-year growth. Analysts expect revenue to increase 1.8% year-over-year to $11.55 billion for the third quarter, ending September 2022. The stock has gained 28.7% year-to-date and 27.5% over the past six months.
BAYRY's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has an A grade for Growth and Value and a B for Stability. Within the Medical - Pharmaceuticals industry, it is ranked #14.
In total, we rate BAYRY on eight distinct levels. Beyond what we have stated above, we have also given BAYRY grades for Sentiment, Momentum, and Quality. Get all the BAYRY ratings here.
Catalyst Pharmaceuticals, Inc. (CPRX)
CPRX in Coral Gables, Fla., is a commercial-stage biopharmaceutical company that emphasizes developing and commercializing therapies for people with rare debilitating, chronic neuromuscular, and neurological diseases in the United States. It provides Firdapse, an amifampridine phosphate tablet for treating patients with the lambert-eaton myasthenic syndrome (LEMS); and Ruzurgi for the treatment of pediatric LEMS patients.
CPRX's 10.19x forward P/E is 60.9% lower than the 26.05x industry average. And its 2.58x forward EV/Sales is 30.1% lower than the 3.69x industry average.
In February, CPRX announced the launch of a podcast called LEMS Aware. The podcast was created to increase awareness of and connections in the Lambert-Eaton myasthenic syndrome (LEMS) community, emphasizing discussing topics different to LEMS and the rare disease community as a whole. Participants in the podcast include LEMS patients, physicians, and influencers in the rare community.
In the first quarter, ending March 31, 2022, CPRX's total revenue increased 42.7% year-over-year to $43.09 million. Its operating income grew 67.8% from its year-ago value to $17.37 million, while its non-GAAP net income amounted to $19.40 million, up 67.9% from its prior-year quarter. The company's non-GAAP EPS rose 63.6% from its prior-year quarter to $0.18.
The $0.17 consensus EPS estimate for the second quarter, ending June 30, 2022, represents 54.6% year-over-year growth. Analysts expect its revenue to increase 35.3% year-over-year to $49.22 million for the same period. The company's shares have surged 20.7% in price over the past year and 22.9% over the past nine months.
It is no surprise that CPRX has an overall A rating, which equates to Strong Buy in our POWR Ratings system. CPRX has an A grade for Value and Quality and a B for Growth. Among the Medical - Pharmaceuticals Industry, it is ranked #7.
Click here to see the additional POWR Ratings for CPRX (Sentiment, Stability, and Momentum).
Click here to checkout our Healthcare Sector Report for 2022
BMY shares were trading at $77.04 per share on Wednesday afternoon, down $0.09 (-0.12%). Year-to-date, BMY has gained 25.56%, versus a -16.33% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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