Despite market volatility, the biotech sector has performed relatively well as a result of breakthrough achievements, advancements in biopharma, and inelastic demand for healthcare products and services.
So, despite the near-term challenges, we think adding quality biotech stocks Pfizer Inc. (PFE) and AstraZeneca PLC (AZN) could be wise now.
Government initiatives support the industry. Biden Administration’s National Biotechnology and Biomanufacturing Initiative is expected to boost the industry’s growth.
Last year, the Biden administration announced a $2 billion investment in biotech and biomanufacturing activities, with the Department of Defense providing $1 billion, primarily for domestic manufacturing facilities.
The growth of biopharmaceuticals market is driven by the potential to treat rare diseases, the rising application of biopharmaceuticals in cancer therapeutics, and contract manufacturing of biopharmaceuticals. The biopharmaceuticals market is estimated to grow at a CAGR of 7.3% until 2027.
The global biotechnology market is estimated to grow at a CAGR of 10.5% until 2025. Investors’ interest in biotech stocks is evident from the iShares Biotechnology ETF’s (IBB) gained 7% over the past month and 9.7% gains over six months.
Let’s discuss the stocks mentioned above in detail.
Pfizer Inc. (PFE)
PFE discovers, develops, manufactures, distributes, and sells biopharmaceutical products worldwide. It offers medicines and vaccines in various therapeutic areas. The company serves wholesalers, retailers, hospitals, clinics, government agencies, and disease control and prevention centers.
On March 10, 2023, PFE reported that the FDA had approved ZAVZPRETTM (zavegepant), the first and only CGRP receptor antagonist nasal spray for the immediate treatment of migraine with or without aura in adults, a significant success for the company.
PFE’s trailing-12-month gross profit margin of 66.02% is 18.2% higher than the industry average of 55.85%. Its trailing-12-month ROTA of 15.91% is higher than the industry average of negative 31.79%.
PFE has paid dividends for 33 consecutive years. Over the last three years, PFE’s dividend payouts have grown at a 5.2% CAGR. While PFE’s four-year average dividend yield is 3.66%, its current dividend translates to a 3.96% yield.
For the fourth quarter that ended December 2022, PFE’s revenues came in at $24.29 billion, up 1.9% year-over-year. Its income from continuing operations increased 39.7% year-over-year to $5 billion.
Also, its non-GAAP adjusted net income attributable to PFE common shareholders came in at $6.55 billion, up 44.2% year-over-year. In comparison, its non-GAAP adjusted EPS increased 44.3% year-over-year to $1.14.
Analysts expect PFE’s revenue to increase 3.4% year-over-year to $71.37 billion in 2024. Its EPS is expected to grow 11.6% year-over-year to $3.76 in 2024. It surpassed EPS estimates in all four trailing quarters. PFE’s shares have gained 5% over the past month to close the last trading session at $41.37.
PFE’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
PFE has an A grade for Value and a B for Quality. Within the Medical – Pharmaceuticals industry, it is ranked #25 out of 166 stocks. Click here for the additional POWR Ratings for Growth, Stability, Sentiment, and Momentum for PFE.
AstraZeneca PLC (AZN)
AZN is a science-led biopharmaceutical company headquartered in Cambridge, United Kingdom. It discovers, develops, and commercializes prescription medicines in oncology, rare diseases, and biopharmaceuticals. The company is also geared toward researching, developing, and manufacturing T-cell receptor therapeutics.
AZN’s trailing-12-month gross profit and EBITDA margins of 80.57% and 31.33% are significantly higher than the industry averages of 55.85% and 2.56%, respectively.
AZN has paid dividends for 23 consecutive years. Over the last three years, AZN’s dividend payouts have grown at a 1.2% CAGR. While AZN’s four-year average dividend yield is 2.64%, its current dividend translates to a 2.67% yield.
AZN’s gross profit increased 12.5% year-over-year to $8.31 billion for the fiscal 2022 fourth quarter that ended December 31, 2022. Its profit for the period came in at $902 million, compared to a loss of $346 million in the previous-year quarter.
Also, its EPS came in at $0.58, compared to a loss per share of $0.22 in the previous-year quarter, while the company’s EBITDA came in at $2.57 billion, up 35.5% year-over-year.
Street expects AZN’s revenue to increase 10.4% year-over-year to $50.70 billion in 2024. Its EPS is estimated to increase 17.5% year-over-year to $4.3 in 2024. It surpassed EPS estimates in all four trailing quarters. Over the past six months, the stock has gained 30.9% to close the last trading session at $73.76.
It’s no surprise that AZN has an overall A rating, equating to a Strong Buy in our POWR Ratings system. It has an A grade for Sentiment and a B grade for Growth and Stability. It is ranked #6 in the same industry.
Beyond what is stated above, we’ve also rated AZN for Value, Momentum, and Quality. Get all AZN ratings here.
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What gives these stocks the right stuff to become big winners, even in this brutal stock market?
First, because they are all low priced companies with the most upside potential in today’s volatile markets.
But even more important, is that they are all top Buy rated stocks according to our coveted POWR Ratings system and they excel in key areas of growth, sentiment and momentum.
Click below now to see these 3 exciting stocks which could double or more in the year ahead.
PFE shares fell $41.37 (-100.00%) in premarket trading Thursday. Year-to-date, PFE has declined -18.36%, versus a 7.52% 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.
2 of the Best Biotech Stocks to Buy This Month StockNews.com
