The pharmaceutical industry has been the beneficiary of significant investor attention amid the COVID-19 pandemic as society turned to its products to fight the coronavirus. Investors’ interest in pharmaceutical stocks is evident in Invesco Dynamic Pharmaceuticals ETF’s (PJP) 24.4% gains over the past year. However, many investors have rotated out of expensive growth stocks from the pharma space over the past few months to capitalize on the economic recovery by betting on the cyclical stocks.
This has created an opportunity to buy fundamentally strong pharmaceutical stocks at cheaper prices. With many patients rescheduling their postponed visits to the hospitals, and pharma companies increasing their spending on research and development to find treatments for other critical diseases, the industry is expected to continue growing. According to Globe Newswire, the pharmaceutical market’s value is expected to reach $2,151.1 billion by 2027.
Ipsen S.A. (IPSEY)
Based in France, biopharmaceutical company IPSEY provides drugs in the areas of oncology, neuroscience, gastroenterology, cognitive disorders, and rare diseases. The company operates through two segments—Specialty Care and Consumer Healthcare.
IPSEY’s total sales for the first quarter, ended March 31, 2021 were €658.50 million ($804.99 million), which represents a 5.5% year-over-year rise. Its sales from its Specialty Care segment increased 6.4% year-over-year at CER to €611.50 million ($747.54 million). Its sales from North America came in at €207 million ($253.05 million), up 4.8% year-over-year at CER. This can be attributed primarily to continued strong demand for its Somatuline and Cabometyx products.
In terms of forward EV/S, IPSEY’s 2.81x is 57.6% lower than the 6.62x industry average. The stock’s 2.14x forward Price/Sales is also lower than the 8.00x industry average. Analysts expect its annual revenue to increase 4.9% year-over-year to $3.30 billion in its fiscal year 2021.
IPSEY announced on May 11 that it had exercised its option to collaborate with Exelixis, Inc. (EXEL) in the pivotal COSMIC-311 Phase III trial for the evaluation of Cabometyx. Results from the planned Phase III interim analysis of COSMIC-311 showed that the trial met the co-primary endpoint of demonstrating significant improvement in progression-free survival. So, the company appears to have immense potential to generate significant returns in the coming quarters should this collaboration be successful. The stock has rallied 35.5% over the past year.
IPSEY’s POWR Ratings reflect this promising outlook with an overall B rating, which equates to Buy. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Stability and Value and a B grade for Growth and Quality. Click here to see the additional POWR ratings for IPSEY (Sentiment and Momentum).
IPSEY is ranked #7 of 230 stocks in the Medical-Pharmaceuticals industry.
- Lundbeck A/S (HLUYY)
Headquartered in Valby, Denmark, HLUYY researches, develops, manufactures and markets pharmaceutical products for the treatment of brain disorders, such as Alzheimer’s disease, Bipolar disorder, and depression. Its product portfolio includes Cipralex, Ebixa and Xenazine.
The company’s revenue from its international markets segment increased 44.7% sequentially to DKK 1.16 billion ($191.02 billion) for the fiscal first quarter ended March 31, 2021. HLUYY’s EBIT for the quarter increased 235.4% year-over-year to DKK 882 million ($144.99 million). Its EPS was DKK 3.13 ($0.51), up 578% from the prior-year period.
In terms of forward EV/S, HLUYY’s 2.61x is 60.6% lower than the 6.62x industry average. The stock’s 16.84x forward EV/EBIT is 16.7% lower than the 20.21x industry average. Its annual revenue is expected to be $2.89 billion in 2022, which represents a 6% year-over-year rise. It also surpassed EPS estimates in three of the trailing four quarters.
Following favorable results from an independent interim analysis, HLUYY and Otsuka Holdings Co., Ltd. (OTSKY) announced on April 13 that they will continue the recruitment of patients for the phase III clinical trial of brexpiprazole, which is used in the treatment of Alzheimer. The stock has gained 2.2% over the past month to close yesterday’s trading session at $32.04.
HLUYY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. It has an A grade for Value, and a B grade for Quality and Stability. Click here to access HLUYY’s ratings for Momentum, Growth and Sentiment.
HLUYY is ranked #18 in the Medical-Pharmaceuticals industry.
Ironwood Pharmaceuticals, Inc. (IRWD)
Biotechnology company IRWD is focused on the development and commercialization of gastrointestinal (GI) products. Its product, LINZESS, which is used in the treatment of irritable bowel syndrome (IBS) and chronic constipation, is sold in the U.S., Mexico, Canada and certain European countries. It is also sold under the brand name Constella.
The company’s net sales came in at $88.84 million for the first quarter, ended March 31, 2021, representing an 11.1% year-over year rise. IRWD’s net income for the quarter came in at $39.93 million, up 1,093.6% from the prior-year period. Its EPS increased 1,150% year-over-year to $0.25.
In terms of forward EV/S, IRWD’s 4.98x is 24.8% lower than the 6.62x industry average. In terms of forward P/S also, the stock’s 4.95x is 38.1% lower than the 8.00x industry average. For the current quarter, ending June 30, 2021, analysts expect IRWD’s EPS and revenue to increase 37.5% and 4%, respectively, year-over-year to $0.22 and $92.97 million. It surpassed the consensus EPS estimates in each of the trailing four quarters.
On May 27, 2021, along with its partner AbbVie Inc. (ABBV), IRWD announced that they had reached an agreement with Teva Pharmaceutical Industries Limited’s (TEVA) Teva Pharmaceuticals USA, Inc. to provide a license to TEVA’s drug application seeking approval to market a generic version of 72 mcg LINZESS. This is expected to help expand IRWD’s market reach. The stock has surged 29.9% over the past three months to close yesterday’s trading session at $11.99.
It’s no surprise that IRWD has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has an A grade for Quality and Value, and a B grade for Growth. Click here to see the additional POWR Ratings for IRWD (Momentum, Sentiment and Stability).
IRWD is ranked #19 in the same industry.
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IPSEY shares were trading at $26.62 per share on Thursday morning, up $0.92 (+3.58%). Year-to-date, IPSEY has gained 31.07%, versus a 12.66% rise in the benchmark S&P 500 index during the same period.
About the Author: Ananyo Guha Niyogi
Ananyo’s ardent interest in capital markets, wealth management, and financial regulatory issues, led him to a career as an investment analyst. His goal is to educate individual investors by making complex financial issues easy to understand. More...
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