Technological innovations like AI are rapidly revolutionizing the medicine segment with improved drug discovery and development. AI is also contributing towards enhancing process efficiency and controlling drug discovery and development costs. These trends are creating promising tailwinds for the pharmaceutical industry.
Given the industry’s rosy prospects, it could be wise to invest in fundamentally strong medical stocks Pfizer Inc. (PFE), AstraZeneca PLC (AZN), and Novartis AG (NVS) for a profitable portfolio.
Artificial Intelligence has gradually solidified its position as a critical advancement in various industries across the world, and the pharmaceutical industry is one of the front-runner beneficiaries. Various aspects of the medical industry, like drug discovery and development, pharmaceutical productivity, and clinical trials, are being revolutionized with the incorporation of AI.
This innovative technology is accelerating the drug discovery process, enhancing product management, helping reduce costs, and improving treatment efficacy, resulting in accelerated growth of the pharmaceutical sector. AI can potentially also reduce the number of failed drug candidates in the discovery process and optimize the use of resources in the R&D process.
With this, the global AI in the drug discovery market is expected to reach around $6.89 billion by 2029, exhibiting growth at a noteworthy CAGR of 29.9%. Factors including cross-industry collaborations, the need to control costs, technological advancements, the need for novel drug therapies, and improving manufacturing capacities are driving the market growth.
Also, with its well-established pharmaceutical industry, high R&D activities, and presence of leading pharma companies, the North American pharma market is boosting the market’s prospects.
Given these encouraging trends, let’s delve deeper into the fundamentals of the top three Medical - Pharmaceuticals stocks, beginning with the third choice.
Stock #3: Pfizer Inc. (PFE)
PFE discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products internationally. The company provides medicines and vaccines in various therapeutic areas, like cardiovascular metabolic, migraine, and women’s health, under the Eliquis, Nurtec ODT/Vydura, Zavzpret, and Premarin family brands.
On February 13, 2025, PFE announced positive results from the Phase 3 TALAPRO-2 study of TALZENNA® (talazoparib), an oral poly ADP-ribose polymerase (PARP) inhibitor, in combination with XTANDI®. The study demonstrated significant and clinically meaningful improvement in overall survival (OS) compared to placebo plus XTANDI in patients with metastatic castration-resistant prostate cancer.
On February 12, 2025, PFE’s supplemental Biologics License Application (sBLA) for ADCETRIS® (brentuximab vedotin) in combination with lenalidomide and a rituximab product was approved by the U.S. FDA for treating adult patients with relapsed or refractory large B-cell lymphoma (LBCL).
PFE’s total revenues increased 21.9% year-over-year to $17.76 billion for the fourth quarter that ended December 31, 2024, and its income from continuing operations stood at $411 million. Also, the company’s adjusted income and EPS came in at $3.59 billion and $0.63, reflecting growth of 505.7% and 530% from the prior year’s quarter, respectively.
Street expects PFE’s revenue and EPS for the fiscal year (ending December 2026) to increase marginally and 3.1% year-over-year to $63.24 billion and $3.05, respectively. Further, it has surpassed the consensus revenue and EPS estimates in all four trailing quarters.
Shares of PFE have surged 0.8% over the past month and 4.3% over the past three months to close the last trading session at $26.74.
PFE’s solid prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Growth, Value, and Sentiment. Within the Medical - Pharmaceuticals industry, PFE is ranked #35 out of 152 stocks.
Click here to access additional ratings of PFE for Momentum, Quality, and Stability.
Stock #2: AstraZeneca PLC (AZN)
Headquartered in Cambridge, United Kingdom, AZN is a biopharmaceutical company focusing on discovering, developing, manufacturing, and commercializing prescription medicines. It offers various medicines, including Imjudo, Datroway, Iressa, Tagrisso, Imfinzi, Lynparza, Calquence, Enhertu, Orpathys, and Truqap.
On January 27, 2025, AZN and Daiichi Sankyo’s ENHERTU® (fam-trastuzumab deruxtecan-nxki) was approved in the US for treating adult patients with unresectable or metastatic hormone receptor (HR)-positive, HER2-low or HER2-ultralow breast cancer. The approval was based on the Priority Review and Breakthrough Therapy Designation and DESTINY-Breast06 Phase III trial results.
On January 23, 2025, AZN announced a C$820 million (US$570m) investment in Canada, targeted towards creating more than 700 high-skilled jobs across all areas of the business. The investment will support the move to a larger, state-of-the-art office facility in the Greater Toronto Area (GTA), Ontario.
For the fourth quarter that ended December 31, 2024, AZN’s total revenue increased 23.8% year-over-year to $14.89 billion. Its gross profit grew 25.2% from the year-ago value to $12.17 billion. The company’s operating profit increased 65% year-over-year to $2.04 billion.
In addition, the company’s profit after tax and EPS amounted to $1.50 billion and $0.97, indicating increases of 56.4% and 56.5% from the prior year’s quarter, respectively. AZN’s EBITDA rose 70.8% year-over-year to $4.37 billion.
According to the fiscal year 2025 guidance, the company expects its total revenue to increase by a high single-digit percentage. Its core EPS is expected to increase by a low double-digit percentage.
Analysts expect AZN’s revenue and EPS for the first quarter (ending March 2025) to increase 8.5% and 5.6% year-over-year to $13.75 billion and $1.09, respectively. Also, the company has topped the consensus revenue estimates in each of the trailing four quarters.
AZN’s shares have gained 7.8% over the past month and 14.4% over the past year to close the last trading session at $75.40.
AZN’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
The stock has a B grade for Growth, Value, Quality, and Stability. Within the Medical - Pharmaceuticals industry, AZN is ranked #8 among 152 stocks.
In addition to the POWR Ratings we’ve stated above, we also have AZN ratings for Momentum and Sentiment. Get all AZN ratings here.
Stock #1: Novartis AG (NVS)
NVA is a Basel, Switzerland-based international pharmaceutical company engaged in the research, development, manufacture, distribution, marketing, and sale of pharmaceutical medicines. The company offers products like Entresto, Cosentyx, Kisqali, Promacta/Revolade, Tafinlar+Mekinist, and Jakavi.
On February 11, 2025, NVS entered into an agreement to acquire Anthos Therapeutics, Inc., a Boston-based, privately held, clinical-stage Biopharmaceutical Company. NVS will also acquire Anthos’ abelacimab, a potential first-in-class monoclonal antibody targeting the FXI inhibition pathway currently in Phase 3 development.
The strategic acquisition bodes well with NVS’ growth strategy and therapeutic area focus, leveraging the company’s strength and expertise in the cardiovascular area.
Also, on December 30, 2024, NVS announced positive topline results from the Phase III STEER study, assessing the efficacy and safety of investigational intrathecal onasemnogene abeparvovec (OAV101 IT) in treatment-naïve patients with spinal muscular atrophy (SMA) Type 2.
The Phase III STEER study met its primary endpoint and delivered an increase from baseline in HFMSE total score in patients with SMA treated with intrathecal onasemnogene abeparvovec.
NVS’ net sales for the fourth quarter that ended December 31, 2024, increased 15.1% from the prior year’s quarter to $13.15 billion. Its core operating income grew 27.2% from the year-ago value to $4.86 billion. The company’s core net income and core EPS came in at $3.93 billion and $1.98, up 25.8% and 29.4% from the prior year’s quarter, respectively.
Further, the company’s free cash flow increased 69.8% from the year-ago value to $3.64 billion.
Analysts expect NVS’ EPS for the first quarter (ending March 2025) to increase 14.1% year-over-year to $2.05, and its revenue is estimated to increase 8.9% year-over-year to $12.88 billion in the same quarter. Moreover, the company surpassed the consensus revenue and EPS estimates in all of the trailing four quarters.
NVS’ stock has gained 7.4% over the past month and 6.2% over the past year to close the last trading session at $109.62.
NVS’ POWR Ratings reflect its robust outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
NVS has a B grade for Value, Growth, Stability, and Quality. It has topped among the 152 stocks in the same industry.
Click here to access additional NVS ratings for Sentiment and Momentum.
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AZN shares were trading at $75.43 per share on Wednesday afternoon, up $0.03 (+0.04%). Year-to-date, AZN has gained 16.74%, versus a 1.24% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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