The pharmaceutical industry is experiencing steady growth due to surging healthcare demand worldwide, particularly with an aging population and the rising prevalence of chronic and rare diseases and regulatory initiatives. Moreover, pharma 4.0 is expected to bring about significant advancements and efficiencies in the industry.
Given the industry’s promising prospects, investors could consider snatching up fundamentally sound pharma stocks Bristol-Myers Squibb Company (BMY), Spero Therapeutics, Inc. (SPRO), and OptiNose, Inc. (OPTN) for steady gains during market dips.
Breakthrough therapies launched over the last decade have reshaped patient care in several areas and positively impacted the outlook for medicine use and related spending. Advances in genomics, targeted therapies, and personalized medicine has enabled more precise and effective treatments tailored to individual patient’s disease characteristics.
Over the past five years, medicine use globally rose by 14%, and a further increase of 12% is anticipated through 2028, resulting in an annual use of 3.8 trillion defined daily doses. Meanwhile, world medicine spending surged by 35% over the past five years and is expected to grow by 38% through 2028.
Furthermore, the emerging field of Pharma 4.0 provides innovative technologies, including automation, artificial intelligence (AI), and data analytics for pharmaceutical manufacturing, R&D, supply chain management, and healthcare delivery, potentially transforming the industry. The global pharma 4.0 market is expected to reach $54.43 billion by 2031, growing at a CAGR of 18.3%.
Also, investors’ interest in pharma stocks is evident from the Vanguard Health Care ETF’s (VHT) 11.9% returns over the past six months.
Given the encouraging market trends, let’s look at the fundamentals of the best Medical - Pharmaceuticals stocks, beginning with the third choice.
Stock #3: Bristol-Myers Squibb Company (BMY)
BMY discovers, develops, licenses, manufactures, markets, distributes, and sells biopharmaceutical products globally. The company provides products for hematology, oncology, immunology, cardiovascular, fibrotic, and neuroscience diseases. Its products include Eliquis, Pomalyst/Imnovid, Orencia, Empliciti, and Sprycel.
BMY’s forward EV/EBITDA of 7.54x is 49.4% lower than the industry average of 12.82x. Also, the stock’s forward Price/Sales of 1.95x is 45.9% lower than the industry average of 3.60x. Its forward Price/Cash Flow multiple of 4.92 is 68.2% lower than the industry average of 15.46.
On May 1, 2024, BMY and Editas Medicine, Inc. (EDIT), a clinical-stage gene editing company, announced a two-year extension to their partnership under which the parties may research, develop, and commercialize autologous and allogeneic alpha-beta T cell medicines for treating cancer and autoimmune diseases.
Under the collaboration, BMY had opted into 13 distant programs across 11 gene targets.
On April 29, BMY entered a multi-year strategic collaboration with Repertoire® Immune Medicines, a biotech company pioneering the discovery and development of programmable T-cell targeted immune medicines to develop tolerizing vaccines for up to three autoimmune diseases.
The partnership aims to develop efficacious, selective, and durable treatments for patients suffering from autoimmune disease by resetting the immune system, reflecting a key component of Bristol’s immunology research strategy.
During the first quarter that ended March 31, 2024, BMY’s total revenues increased 4.7% year-over-year to $11.87 billion, and its net product sales were $1156 billion, up 4.6% from the prior year’s quarter. Its gross profit rose 1.8% year-over-year to $8.93 billion. In addition, the company’s cash and cash equivalents were $9.33 billion as of March 31, 2024.
Analysts expect BMY’s revenue for the second quarter (ending December 2024) to increase 2.4% year-over-year to $11.50 billion. Similarly, its revenue is expected to grow 2.3% year-over-year to $46.02 billion. Furthermore, the company has surpassed the consensus EPS estimates in three of the trailing four quarters.
BMY’s stock has declined 3.6% over the past five days to close the last trading session at $43.70.
BMY’s robust fundamentals are reflected in its POWR Ratings. 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, each weighted to an optimal degree.
BMY has a B grade for Value and Growth. It is ranked #22 out of 161 stocks in the Medical - Pharmaceuticals industry.
In addition to the POWR Ratings stated above, one can access BMY’s ratings for Quality, Stability, Sentiment, and Momentum here.
Stock #2: Spero Therapeutics, Inc. (SPRO)
SPRO is a multi-asset clinical-stage biopharmaceutical company that focuses on identifying, developing, and commercializing novel treatments for multi-drug resistant (MDR) bacterial infections and rare diseases. The company’s product candidates include tebipenem pivoxil hydrobromide (HBr), SPR206, and SPR720.
In terms of forward EV/Sales, SPRO is trading at 0.26x, 92.4% lower than the industry average of 3.40x. Likewise, the stock’s forward EV/Sales of 1.73x is 52% lower than the industry average of 3.60x.
On February 28, SPRO received clearance from the FDA for its investigational new drug (IND) application to evaluate SPR206 in a Phase 2 clinical study. SPR206 is a novel, intravenously (IV) administered polymyxin antibiotic for treating hospital-acquired and ventilator-associated bacterial pneumonia (HABP/VABP) caused by MDR Gram-negative bacterial infections.
SPR206 is being developed to address high unmet need areas, and if approved, it will provide clinicians with a valuable new therapeutic option.
SPRO’s collaboration revenue-related party for the fourth quarter that ended December 31, 2023, increased 55.4% year-over-year to $71.60 million. Its total revenue was $73.52 million, up 55% from the previous year’s period. Also, as of December 31, 2023, its total assets stood at $182.39 million, compared to $124.80 million as of December 31, 2022.
Street expects SPRO’s revenue to increase 940.8% year-over-year to $21.53 million for the first quarter that ended March 2024. The company’s EPS grew 82.7% year-over-year for the same period. Moreover, SPRO has topped the consensus revenue estimates in each of the trailing four quarters.
Shares of SPRO have gained 11.7% over the past three months and 41.2% over the past six months to close the last trading session at $1.61.
SPRO’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
SPRO has an A grade for Value and a B for Quality and Sentiment. It is ranked #20 among 161 stocks in the Medical – Pharmaceuticals industry.
Click here to access the additional POWR Ratings for Growth, Stability, and Momentum for SPRO.
Stock #1: OptiNose, Inc. (OPTN)
OPTN operates as a specialty pharmaceutical company that focuses on the development and commercialization of products for patients treated by ear, nose, throat (ENT) and allergy specialists. The company offers XHANCE, a therapeutic product, and Onzetra Xsail, a powder EDS device.
OPTN’s forward EV/Sales of 1.78x is 47.7% lower than the industry average of 3.40x. Also, the stock’s forward Price/Sales of 1.13x is 68.5% lower than the industry average of 3.60x.
On March 16, OPTN announced that the FDA approved its XHANCE® (fluticasone propionate) nasal spray for treating chronic rhinosinusitis without nasal polyps in patients 18 years and older. This FDA approval of XHANCE, as the first and only approved drug treatment for chronic sinusitis (CS), is a landmark achievement for the company.
OPTN announced preliminary XHANCE net product revenue of $14.90 million for the first quarter that ended March 31, 2024, indicating growth of around 26% from the prior year’s quarter. Further, for the fiscal year 2025, the company expects peak XHANCE net revenues to surpass $300 million. It is also expected to produce positive income from operations for the full year.
For the fourth quarter that ended December 31, 2023, OPTN reported total revenues of $19.87 million. Its total cost and expenses decreased by 23.4% year-over-year to $22.38 million. Additionally, as of December 31, 2023, the company’s cash and cash equivalents came in at $73.68 million.
Analysts expect OPTN’s revenue for the fiscal year 2024 to increase 27.4% year-over-year to $90.46 million. The consensus revenue estimate of $130.22 million for the fiscal year 2025 indicates an improvement of 43.9% year-over-year. In addition, the company surpassed the consensus revenue estimates in all four trailing quarters.
OPTN’s stock surged 4.4% over the past five days to close the last trading session at $0.88.
OPTN’s POWR ratings reflect bright prospects. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has a B grade for Growth, Value, Sentiment, and Quality. OPTN is ranked #17 in the same industry.
Click here to access OPTN’s additional grades for Stability and Momentum.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
OPTN shares rose $0.00 (+0.03%) in premarket trading Friday. Year-to-date, OPTN has declined -31.78%, versus a 6.58% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
3 Pharma Stocks to Snatch up During Market Dips StockNews.com
