The Pharmaceuticals market shows solid growth, primarily driven by innovative technology and an increasing demand for healthcare, especially in emerging countries. Moreover, as the industry enjoys inelastic demand, quality pharma stocks Pfizer Inc. (PFE), Sanofi (SNY), and Spero Therapeutics, Inc. (SPRO) might be ideal stocks to buy.
The pharma industry’s growth is fueled by the growing and aging population and chronic diseases. Moreover, the improvements in purchasing power and access to quality healthcare for poor and middle-class families worldwide also are driving the growth of the global pharma industry.
The global pharmaceutical manufacturing market is expected to grow at a CAGR of 11.3% until 2028.
Also, generative AI is revolutionizing the pharmaceutical industry with advanced data analysis, drug discovery, and personalized medicine capabilities. This technology is expected to successfully overcome traditional drug discovery obstacles such as high costs, lengthy timelines, and high failure rates.
Global Generative AI in the Pharma market is expected to be worth around $22.58 billion by 2032, growing at a CAGR of 31.2%.
Additionally, the introduction of generic medicines has helped sustain the country’s healthcare system with improved patient access. The US generic drug market is expected to reach $110.70 billion by 2028, exhibiting a CAGR of 4.1% until 2028.
Let’s discuss the stocks mentioned above in detail:
Pfizer Inc. (PFE)
PFE discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide.
On May 31, 2023, PFE announced that the U.S. Food and Drug Administration had approved ABRYSVO (Respiratory Syncytial Virus Vaccine), the company’s bivalent RSV prefusion F (RSVpreF) vaccine, for the prevention of lower respiratory tract disease caused by RSV in individuals 60 years and older.
ABRYSVO is unadjuvanted and composed of two preF proteins selected to optimize protection against RSV A and B strains and was observed to be safe and effective.
On May 25, 2023, PFE announced that the U.S. Food and Drug Administration had approved PAXLOVID (nirmatrelvir tablets and ritonavir tablets) for the treatment of mild-to-moderate COVID-19 in adults who are at high risk for progression to severe COVID-19, including hospitalization or death.
PAXLOVID has been available in the U.S. since December 2021 under Emergency Use Authorization (EUA), and the overall benefit/risk profile and indication for use in eligible adults remain consistent with the EUA. More than 11.6 million treatment courses of PAXLOVID have been prescribed in the U.S. to date.
PFE pays $1.64 annually as dividends. This translates to a yield of 4.07% at the current price, compared to the 4-year average dividend yield of 3.70%. Its dividend payments have grown at CAGRs of 4.9% and 5.3% over the past three and five years, respectively.
Its trailing-12-month asset turnover ratio of 0.49x is 38.5% higher than the 0.35x industry average. Its trailing-12-month gross profit margin of 68.93% is 23.6% higher than the 55.77% industry average.
During the fiscal first quarter ended March 31, 2023, PFE’s specialty care revenue increased 3.1% year-over-year to $3.61 billion. Non-GAAP net income attributable to PFE common shareholders came in at $7.03 billion, while its non-GAAP earnings per share came in at $1.23. Also, income from continuing operations came in at $5.56 billion.
PFE’s revenue is expected to be $13.96 billion for the fiscal second quarter ending June 2023. Its EPS is expected to be $0.63 in the same quarter. Also, it has surpassed EPS estimates in each of the trailing four quarters, which is impressive.
Shares of PFE have gained 5.4% over the past month to close the last trading session at $39.36.
PFE’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an A grade for Value. It is ranked #39 out of 169 stocks in the Medical - Pharmaceuticals industry.
Beyond what is stated above, we’ve also rated PFE for Growth, Momentum, Sentiment, Quality, and Stability. Get all PFE ratings here.
Sanofi (SNY)
Headquartered in Paris, France, SNY engages in the research, development, manufacture, and marketing of therapeutic solutions in the United States, Europe, and internationally. It operates through Pharmaceuticals; Vaccines; and Consumer Healthcare segments.
On April 27, 2023, SNY announced the completion of its acquisition of Provention Bio, Inc. The acquisition adds TZIELD (teplizumab-mzwv), an innovative, fully owned, first-in-class therapy in type 1 diabetes, to SNY’s core asset portfolio in General Medicines. It further drives its strategic shift toward products with a differentiated profile.
On February 15, SNY declared a quarterly dividend of $1.90, payable on June 23, 2023. SNY pays $1.90 annually as dividends. This translates to a yield of 3.77% at the current price, compared to the 4-year average dividend yield of 3.72%. Its dividend payments have grown at a CAGR of 3.9% over the past three years.
SNY’s trailing-12-month gross profit margin of 69.93% is 25.4% higher than the 55.77% industry average. Its trailing-12-month EBITDA margin of 31.16% is 869.3% higher than the 3.21% industry average.
SNY’s net sales rose 5.7% year-over-year to €10.22 billion ($11.06 billion) in the fiscal first quarter that ended March 31, 2023. Gross profit increased 8.5% year-over-year to €7.78 billion ($8.41 billion). Earnings per share came in at €1.60, while its operating income increased 2.8% year-over-year to €2.46 billion ($2.66 billion).
Analysts expected SNY’s revenues to increase 8.7% year-over-year to $11.20 billion for the fiscal second quarter ending June 2023. Its EPS is expected to be $0.87 for the same quarter. Also, it has surpassed EPS estimates in each of the trailing four quarters.
The stock has gained 26.6% over the past nine months to close the last trading session at $50.72.
SNY’s robust prospects are reflected in its POWR Ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
SNY has an A grade for Value and a B in Stability. It is ranked #23 in the same industry.
Click here to see SNY’s additional POWR Ratings for Growth, Momentum, Quality, and Sentiment.
Spero Therapeutics, Inc. (SPRO)
SPRO is a clinical-stage biopharmaceutical company that focuses on identifying, developing, and commercializing novel treatments for multi-drug resistant (MDR) bacterial infections and rare diseases in the United States
Its trailing-12-month asset turnover ratio of 0.41x is 17.1% higher than the 0.35x industry average.
SRO’s revenue remained flat at $2.07 million in the fiscal first quarter that ended March 31, 2023. Also, net loss decreased 59.6% year-over-year to $13.27 million and net loss per share attributable to common shareholders per share decreased 75.2% year-over-year to $0.25.
SPRO’s revenue is expected to be $28.65 million for the fiscal year ending December 2023. Also, it has surpassed revenue and EPS estimates in three of the trailing four quarters.
SPRO gained 75.3% over the past nine months to close its last trading session at $1.62.
SPRO’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
SPRO also has an A grade for Value and a B in Growth and Sentiment. It is ranked #28 in the same industry.
For additional ratings for SPRO’s Momentum, Stability, and Quality, click here.
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PFE shares were trading at $39.56 per share on Thursday morning, up $0.20 (+0.51%). Year-to-date, PFE has declined -21.24%, versus a 15.28% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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