The pharmaceutical industry is known for its relative stability and resilience, even during economic downturns. This is due to the consistent demand for medications and healthcare, regardless of market conditions.
Therefore, it could be wise to secure your portfolio with three fundamentally robust pharma stocks, AstraZeneca PLC (AZN), Bristol-Myers Squibb Company (BMY), and Astellas Pharma Inc. (ALPMY), which seem well-positioned to weather macroeconomic challenges.
Despite the pharma industry facing several challenges, such as supply chain disruptions and a lack of skilled workers, the industry's continued growth is expected to be fueled by rising investments in healthcare and the rapid integration of digital technologies. The global pharmaceutical market is expected to reach $2.40 trillion by 2029, exhibiting a CAGR of 6.1%.
Governments worldwide have recognized the potential of innovative healthcare technologies to improve patient outcomes and reduce costs. A notable example is the U.S. government's commitment of over $20 billion towards digital health technology as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Further, the pharmaceutical industry is experiencing a rising demand for new drugs, and the advent of Artificial Intelligence (AI) has emerged as a game-changer in this context. The integration of generative AI algorithms has revolutionized drug discovery and development processes, offering several benefits and opportunities.
The market for generative AI in drug discovery is expected to surpass $1.13 billion by 2032, growing at an impressive CAGR of 27.1%, signifying the market's significant potential and steady expansion.
With the increasing demand for pharmaceuticals, technological advancements, government investments, and the industry's defensive nature, the pharmaceutical sector is expected to remain in a favorable spot this year.
As a result, investing in stocks like AZN, BMY, and ALPMY could be beneficial. These companies have established themselves with a strong market presence, solid fundamentals, and innovative treatment approaches. That being said, let us evaluate the fundamentals of these stocks in detail to gain a better perspective.
AstraZeneca PLC (AZN)
Headquartered in Cambridge, the United Kingdom, AZN is a renowned biopharmaceutical company focusing on discovering, developing, manufacturing, and commercializing prescription medicines. Its marketed products treat oncology, covid-19, respiratory, cardiovascular, renal, and metabolism diseases, etc.
On June 9, AZN formed a collaborative partnership with Quell Therapeutics, which includes an exclusive option and license agreement. This collaboration aims to advance the development of multiple engineered T-regulator (Treg) cell therapies that could provide a cure for Type 1 Diabetes (T1D) and Inflammatory Bowel Disease (IBD).
This partnership aligns with AZN’s strategy of targeting the root causes of diseases to bring transformative care to patients suffering from chronic autoimmune conditions more rapidly.
On February 24, AZN acquired CinCor Pharma, Inc., a clinical-stage biopharmaceutical company in the United States specializing in innovative therapies for challenging conditions like resistant and uncontrolled hypertension and chronic kidney disease.
This acquisition bolstered AZN’s pipeline of cardiorenal treatments, including adding baxdrostat (CIN-107), an Aldosterone Synthase Inhibitor (ASI) designed to lower blood pressure in individuals with treatment-resistant hypertension. This development enriches AZN's existing cardiorenal portfolio.
For the first quarter that ended March 31, 2023, AZN’s total revenue stood at $10.88 billion, while its gross profit rose 13.9% year-over-year to $8.97 billion. The company’s profit for the period and EPS amounted to $1.80 billion and $1.16, representing increases of 364.9% and 364% from the prior-year quarter, respectively. In addition, its operating profit grew 190.3% from the year-ago value to $2.55 billion.
The consensus EPS estimate of $1 for the second quarter (ended June 30, 2023) represents a 16.1% improvement year-over-year. The consensus revenue estimate of $11.12 billion for the same period indicates a 3.2% increase from the prior-year period. Moreover, the company surpassed the revenue and EPS estimates in three of the trailing four quarters, which is promising.
AZN’s shares have gained 17.5% over the past nine months to close the last trading session at $65.25.
AZN’s POWR Ratings reflect this robust outlook. The stock has an overall A rating, translating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Growth, Value, Stability, and Quality. In the 167-stock Medical – Pharmaceuticals industry, it is ranked #8. Click here to see AZN’s ratings for Momentum and Sentiment.
Bristol-Myers Squibb Company (BMY)
BMY discovers, develops, licenses, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. It offers products for hematology, oncology, cardiovascular, immunology, fibrotic, and neuroscience diseases.
On June 26, BMY received approval from the European Commission (EC) for CAMZYOS® (mavacamten, 2.5 mg, 5 mg, 10 mg, 15 mg capsules) as a treatment for symptomatic obstructive hypertrophic cardiomyopathy (HCM) in adult patients with New York Heart Association (NYHA) class II-III symptoms.
CAMZYOS is a unique allosteric and reversible inhibitor specifically targeting cardiac myosin, making it the first approved cardiac myosin inhibitor that addresses the underlying pathophysiology of HCM.
Commenting on this, Samit Hirawat, M.D., chief medical officer at BMY, said, “We’re proud to bring this innovative treatment to more patients around the world while reinforcing our ongoing dedication to transforming patients’ lives through science on a global scale.”
On June 14, BMY declared a quarterly dividend of $0.57 per share, payable to its shareholders on August 1, 2023. The company’s annual dividend of $2.28 translates to a 3.54% yield on its prevailing prices, while its four-year average dividend yield is 3%.
Its dividend payouts have grown at CAGRs of 8.9% and 7% over the past three and five years, respectively. Also, it has a record of six years of consecutive dividend growth.
BMY’s total revenues amounted to $11.34 billion for the first quarter (ended March 31, 2023), while its total expenses declined 13.9% from the year-ago value to $8.57 billion. The company’s attributable net earnings and EPS increased 76.9% and 81.4% from the prior-year quarter to $2.26 billion and $1.07, respectively. Also, its EBIT came in at $2.77 billion, up 64.2% year-over-year.
Street expects BMY’s EPS for the second quarter (ended June 30, 2023) to increase 5.3% year-over-year to $2.03, while its revenue for the same period is expected to be $11.87 billion. Moreover, the company has an excellent earnings surprise history, surpassing the EPS estimates in each of the trailing four quarters.
The stock has gained marginally over the past month to close the last trading session at $64.43.
BMY’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It has an A grade for Value and a B for Growth, Stability, Sentiment, and Quality. Within the same industry, it is ranked #5. Click here to see BMY’s rating for Momentum.
Astellas Pharma Inc. (ALPMY)
Headquartered in Tokyo, Japan, ALPMY manufactures, markets, imports, and exports pharmaceuticals in Japan, the United States, and internationally. Its product portfolio offers treatment of prostate cancer, acute myeloid leukemia, metastatic urothelial cancer, and chronic kidney diseases.
On June 15, ALPMY and Cullgen Inc. entered a research collaboration and exclusive option agreement. This partnership aims to explore and develop a range of groundbreaking protein degraders, which will be achieved by leveraging Cullgen's uSMITE™ targeted protein degradation platform, along with ALPMY's drug discovery expertise.
In the same month, ALPMY and Kate Therapeutics entered into an exclusive license agreement to jointly develop and commercialize KT430, an investigational gene therapy in the preclinical stage that aims to treat X-linked myotubular myopathy (XLMTM), a rare neuromuscular disease. This collaboration aims to advance the development and potential availability of KT430 for patients suffering from XLMTM.
Adam Pearson, Chief Strategy Officer at ALPMY, emphasized that the addition of KT430, alongside the ongoing AT132 program, strengthens their dedication to the XLMTM patient community and their commitment to delivering transformative medicines.
In the fiscal year 2022 that ended March 31, 2023, ALPMY’s revenue increased 17.2% year-over-year to ¥1.52 trillion ($10.52 billion). The company’s profit for the year and operating profit increased 17.9% and 17.2% from the prior-year period to ¥224.62 billion ($1.55 billion) and ¥286.90 billion ($1.98 billion), respectively. Also, its EPS improved 19.8% from the year-ago value to ¥123.42.
Analysts expect ALPMY’s revenue and EPS for the fiscal year 2023 (ending March 2024) to increase 129.9% and 84% year-over-year to $10.54 billion and $0.80, respectively. Additionally, the company surpassed the revenue estimates in three of the trailing four quarters.
Over the past nine months, the stock has gained 9.8% to close the last trading session at $14.71.
It’s no surprise that ALPMY has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. It has an A grade for Growth, Value, and Quality and a B for Stability. Out of 167 stocks in the same industry, it is ranked #4.
In addition to the POWR Ratings we’ve stated above, we also have ALPMY’s ratings for Momentum and Sentiment. Get all ALPMY ratings here.
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AZN shares were trading at $67.32 per share on Wednesday afternoon, up $2.07 (+3.17%). Year-to-date, AZN has gained 0.70%, versus a 16.73% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Mukherjee
Anushka's ultimate aim is to equip investors with essential knowledge that empowers them to make well-informed investment choices and attain sustained financial prosperity in the long run.
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