The pharmaceutical sector is poised for robust growth, propelled by the rapidly expanding market for medications and vaccines. Moreover, the consistent demand for its products upholds the industry’s resilience, rendering it less vulnerable to economic fluctuations.
Therefore, promising pharma stocks GSK plc (GSK), Johnson & Johnson (JNJ), and Bristol-Myers Squibb Company (BMY) could be worth your attention. Before delving into the stock fundamentals, let’s look at the pharma industry’s prospects.
The growth of the aging population and rising chronic diseases fuel the pharma industry’s growth. Moreover, the improvements in purchasing power and access to quality healthcare for poor and middle-class families worldwide are also driving the development of the global pharma industry.
The global generic drug market is expected to grow at a CAGR of 5.1% to reach $613.34 billion by 2030.
Moreover, increased demand for personalized medicine and targeted therapy is boosting the industry. According to Statista, worldwide pharmaceutical revenues are expected to grow at a CAGR of 5.8% to reach $1.48 trillion by 2028.
In light of these encouraging trends, let’s look at the fundamentals of the three Medical - Pharmaceuticals stocks worth watching, beginning with number 3.
Stock #3: GSK plc (GSK)
Headquartered in Brentford, the United Kingdom, GSK researches, develops, and manufactures vaccines and specialty medicines to prevent and treat diseases. It operates through four segments: Pharmaceuticals; Pharmaceuticals R&D; Vaccines; and Consumer Healthcare.
On October 30, GSK extended its collaboration with 23andMe Holding Co. (ME) through a new non-exclusive data licensing agreement, allowing it to utilize ME’s database for drug target discovery. This is expected to provide GSK with access to a valuable resource for genetic and phenotypic information, potentially enhancing the company’s drug development efforts.
In the same month, GSK reported positive preliminary results from its Phase III trial of AREXVY, a Respiratory Syncytial Virus (RSV) vaccine, in adults aged 50 to 59. This development could have a positive impact on GSK's business by extending the vaccine's market reach and addressing unmet medical needs.
GSK’s turnover for the third quarter ended September 30, 2023, increased 4.1% year-over-year to £8.15 billion ($9.89 billion). Its adjusted operating profit rose 6.4% from the prior-year quarter to £2.77 billion ($3.37 billion).
The company’s adjusted profit after taxation from continuing operations increased 9.2% year-over-year to £2.21 billion ($2.69 billion). Also, its adjusted EPS from continuing operations rose 7.5% year-over-year to 50.40p.
GSK’s EPS and revenue are estimated to increase 12.2% and 1.8% year-over-year to $0.71 and $9.29 billion in the fiscal fourth quarter (ending December 30, 2023). It surpassed the consensus revenue estimates in each of the trailing four quarters, which is impressive.
Over the past year, the stock has gained 3.3% to close the last trading session at $34.58.
GSK’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, equating 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.
GSK also has an A grade for Value and a B for Stability, Sentiment, and Quality. It is ranked #10 in the 152-stock Medical - Pharmaceuticals industry.
Click here for GSK’s additional Growth and Momentum ratings.
Stock #2: Johnson & Johnson (JNJ)
JNJ researches, develops, manufactures, and sells various products in the healthcare field worldwide. It operates in three segments: Consumer Health Segment; Pharmaceutical Segment; and MedTech Segment.
On October 19, JNJ declared a cash dividend for the fourth quarter of $1.19 per share on its common stock, payable to shareholders on December 5, 2023. Its annual dividend of $4.76 yields 3.20% on prevailing prices.
On September 14, JNJ announced that it is rebranding and refocusing on healthcare innovation, uniting its segments and emphasizing pharmaceutical and medtech solutions to address complex health challenges. This strategic shift aims to enhance JNJ’s reputation and global impact in healthcare.
JNJ’s sales to customers for the third quarter of 2023 increased 6.8% year-over-year to $21.35 billion. Its gross profit increased 6.7% from the prior-year quarter to $14.75 billion.
The company’s adjusted net earnings rose 14.1% year-over-year to $6.78 billion. In addition, its adjusted EPS came in at $2.66, representing a 19.3% increase from the year-ago value.
Street expects JNJ’s EPS for the quarter ending December 2023 to increase 4.9% year-over-year to $2.46. Its revenue for the fiscal year ending December 2024 is expected to increase 3.5% year-over-year to $87.70 billion. It surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock gained marginally intraday to close the last trading session at $148.69.
JNJ’s POWR Ratings reflect strength. It has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has a B grade for Value, Stability, and Quality. It is ranked #7 in the same industry. To see JNJ’s Growth, Momentum, and Sentiment ratings, click here.
Stock #1: Bristol-Myers Squibb Company (BMY)
BMY discovers, develops, licenses, manufactures, markets, distributes, and sells biopharmaceutical products. It offers products for hematology, oncology, cardiovascular, immunology, fibrotic, and neuroscience diseases.
On October 30, BMY announced that its application for Opdivo (nivolumab) in combination with cisplatin-based chemotherapy as a first-line treatment for urothelial carcinoma had been validated by the European Medicines Agency, beginning the centralized review process.
The CheckMate -901 trial results showed statistically significant and clinically meaningful improvements in overall survival and progression-free survival, potentially offering a new treatment option for patients, which could have a positive impact on the company's pharmaceutical business.
In the same month, BMY announced that Opdivo had been approved by the U.S. Food and Drug Administration (FDA) for the adjuvant treatment of adult and pediatric patients 12 years and older with completely resected stage IIB or IIC melanoma, improving upon its existing approval.
BMY’s total revenues amounted to $10.97 billion for the third quarter (ended September 30, 2023), while its total expenses declined 2% from the year-ago value to $8.83 billion. The company’s attributable net earnings increased 20% from the prior-year quarter to $1.93 billion, while its non-GAAP EPS came in at $2.00, up marginally year-over-year.
Street expects BMY’s EPS for the fiscal quarter ending March 2024 to increase marginally year-over-year to $2.06, while its revenue for the same period is expected to increase 3.1% from the prior-year quarter to $11.68 billion. Moreover, the company has an excellent earnings surprise history, surpassing the EPS estimates in three out of the trailing four quarters.
The stock declined marginally intraday to close the last trading session at $51.28.
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, and Quality. Within the same industry, it is ranked #4. Click here to see BMY’s ratings for Momentum and Sentiment.
What To Do Next?
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JNJ shares were trading at $149.72 per share on Thursday afternoon, up $1.03 (+0.69%). Year-to-date, JNJ has declined -13.37%, versus a 13.71% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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