The global pharma market is expanding with rising healthcare demand and precision medicine advances, fueled by a growing focus on health and longevity. Thus, investors could consider investing in robust pharma stocks Collegium Pharmaceutical, Inc. (COLL), AstraZeneca PLC (AZN), and Merck & Co., Inc. (MRK) in 2024, given their solid growth prospects.
Last year, global biopharma R&D funding rose to $72 billion, with 69 novel active substances launched globally, including 24 in the United States. Clinical development productivity surged to 17.4, the highest since 2018, driven by improved success rates and innovative trial methodologies.
On top of it, in 2024, pharma companies are focused on reinventing strategies to drive returns, leveraging innovations while optimizing operational costs, and pursuing strategic mergers and acquisitions for transformational growth. The global pharma market is projected to reach $1.16 trillion this year, and it is anticipated to grow at a CAGR of 6.2% to reach $1.47 trillion by 2028.
Besides, this year, U.S. pharmaceutical and life sciences deal activity is expected to range between $225 billion and $275 billion, prioritizing margin accretion amid geopolitical and regulatory uncertainty, focusing on precision medicine in areas like oncology and immunology.
In addition, technological advancements like robotics and AI are boosting efficiency in pharma manufacturing. Shifts toward personalized medicine are prompting supply chain restructuring and driving M&A activities for market consolidation and innovation. The global pharma manufacturing market is expected to grow at a CAGR of 7.6% by 2030.
Furthermore, global medicine spending is projected to reach $2.30 trillion by 2028, with biotech spending expected to exceed $892 billion by the same year.
Considering these conducive trends, let’s examine the fundamentals of three Medical - Pharmaceuticals stock picks, beginning with the third choice.
Stock #3: Collegium Pharmaceutical, Inc. (COLL)
COLL develops and sells advanced pain management medications, including Xtampza ER and Nucynta, targeting severe and chronic pain. Its innovative formulations address issues like abuse deterrence and opioid-induced constipation, improving patient outcomes in pain management.
COLL’s revenue has grown at a CAGR of 22.3% over the past three years. Over the same period, the company’s EBIT has increased at a CAGR of 46.1%, while its net income and EPS have grown at CAGRs of 21.7% and 19.4%, respectively.
During the fourth quarter, which ended December 31, 2023, COLL’s net product revenues grew 15.5% year-over-year to $149.75 million. The company's adjusted net income and EBITDA rose 52.1% and 36.2% from a year-ago quarter to $64.17 million and $104.15 million, respectively. Also, its adjusted EPS increased 45% from the prior-year quarter to $1.58.
The company recently reaffirmed its fiscal year 2024 guidance, expecting net product revenues to reach between $580 million and $595 million, with adjusted operating expenses projected to range from $120 million to $125 million. In addition, adjusted EBITDA is forecasted to be between $380 million to $395 million.
COLL’s revenue and EPS are expected to grow 3% and 27.5% year-over-year to $583.79 million and $6.97, respectively, for the fiscal year ending December 2024. The company surpassed its EPS estimates in three of the trailing four quarters, which is notable.
The stock has surged 56.3% over the past nine months and 51.5% over the past six months to close the last trading session at $36.35. Also, it gained 10.8% intraday.
COLL’s POWR Ratings reflect this steady outlook. The stock has an overall A rating, translating to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has an A grade for Quality and a B for Growth and Value. Within the Medical - Pharmaceuticals industry, it is ranked #15 among 164 stocks.
Click here to see COLL’s ratings for Momentum, Stability, and Sentiment.
Stock #2: AstraZeneca PLC (AZN)
Based in Cambridge, the United Kingdom, AZN is a biopharmaceutical company focused on developing and commercializing prescription medicines across diverse therapeutic areas, including cardiovascular, oncology, and rare diseases. Its portfolio serves healthcare professionals globally through an extensive distribution network.
On February 8, 2024, AZN declared a second interim dividend of $1.97 per share, payable on March 25, 2024. The company pays $1.45 annually, which translates to a yield of 2.20% on the prevailing price level. Its four-year average dividend yield is 2.41%. Moreover, the company boasts a 24-year record for consecutive years of dividend payments.
AZN’s revenue has grown at a CAGR of 19.8% over the past three years. Over the same period, the company’s EBIT has increased at a CAGR of 33.7%, while its net income and EPS have grown at CAGRs of 23.1% and 16.1%, respectively.
AZN’s total revenue increased 7.3% from a year-ago quarter to $12.02 billion in the fourth quarter that ended December 31, 2023. Its gross profit and operating profit grew 17% and 12.8% year-over-year to $9.72 billion and $1.23 billion, respectively. Moreover, the company's EPS for the same quarter rose 6.9% from the previous-year quarter to $0.62.
Analysts expect its revenue and EPS to grow 11.2% and 5% year-over-year to $50.92 billion and $3.81, respectively, for the fiscal year ending December 2024. The company surpassed its revenue and EPS estimates in three of the trailing four quarters.
AZN’s shares have increased 3.5% over the past three months to close the last trading session at $65.83. It gained 2.7% intraday.
AZN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It has a B grade for Growth, Value, Stability, and Quality. Within the same industry, it is ranked #10.
In addition to the POWR Ratings stated above, access AZN’s Momentum and Sentiment ratings here.
Stock #1: Merck & Co., Inc. (MRK)
MRK operates globally in healthcare, offering human health pharmaceuticals and veterinary products. Through collaborations with leading organizations, it aims to develop innovative treatments across various medical fields, including oncology, immunology, and neuroscience.
On January 23, 2024, MRK declared a quarterly dividend of $0.77 per common share for the second quarter of 2024, payable on April 5, 2024. The company pays $3.08 annually, which translates to a yield of 2.38% on the prevailing price level. Its four-year average dividend yield is 2.97%.
The company has raised its dividend payouts at a CAGR of 7.8% and 9.3% over the past three and five years. Moreover, the company boasts a 13-year record for consecutive years of dividend growth.
MRK’s revenue has grown at a CAGR of 13.1% over the past three years.
In the fourth quarter of 2023, MRK’s sales rose 5.8% from the prior-year quarter to $14.63 billion. The company's non-GAAP net income attributable to MRK and EPS amounted to $67 million and $0.03, respectively. For the fiscal year 2024, the company anticipates sales between $62.70 billion to $64.20 billion, with a non-GAAP EPS between $8.44 and $8.59.
Street expects its revenue and EPS for the fiscal year ending December 2024 to grow 5.7% and 466.7% year-over-year to $63.59 billion and $8.56, respectively. The company surpassed its revenue estimates in each of the trailing four quarters.
The stock has gained 17.1% over the past year and 14.3% over the past nine months to close the last trading session at $129.45. It also gained marginally intraday.
MRK’s POWR Ratings reflect this robust outlook. The stock has an overall A rating, translating to a Strong Buy in our proprietary rating system.
It has an A grade for Sentiment and a B for Growth, Stability, and Quality. In the same industry, it is ranked first.
To access additional ratings for MRK’s Value and Momentum, click here.
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MRK shares were trading at $129.04 per share on Monday morning, down $0.41 (-0.32%). Year-to-date, MRK has gained 18.36%, versus a 6.86% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
3 Pharma Powerhouses for Long-Term Growth in 2024 StockNews.com
