The U.S. healthcare industry is massive and continues to grow as the population swells. Moreover, the average price of health care in the United States increased by 4% in 2022 after rising 4.2% previously, boosting the pharma companies.
Furthermore, the rapid adoption of AI in the pharma industry is expected to increase efficiency and help accelerate drug discovery and development, clinical trials, and fraud detection. On top of it, blockchain technology aims to simplify transaction processing while also improving security and transparency without the need for a third party, which should help companies reduce costs and energy.
There was a surge in alliances and collaborations between major pharmaceutical companies and suppliers of AI technology last year. The U.S. healthcare providers and facilities spent $17.9 billion on cloud-based technologies in 2022, and it is expected to jump to $29.15 billion in 2026.
Furthermore, the inelastic demand for healthcare products and services helps the industry to perform relatively well amid market turbulence. Investors’ interest in pharmaceutical stocks is evident from the VanEck Vectors Pharmaceutical ETF’s (PPH) 14.5% gains over the past month as compared to the 8.7% return of the S&P 500.
Eli Lilly & Co. (LLY)
LLY discovers, develops, and markets human pharmaceuticals worldwide. The company provides diabetes, oncology, neuroscience, and other products.
On December 22, 2022, LLY and ProQR Therapeutics N.V. (PRQR) announced the expansion of their licensing and collaboration agreement focused on discovering, developing, and commercializing new genetic medicines.
Through this expanded collaboration, LLY and PRQR will explore further applications of the Axiomer platform to unlock new innovative treatments for people living with diseases with high unmet medical needs.
On December 12, LLY announced a dividend of $1.13 per share, representing a 15% increase in its quarterly dividend payable on March 10, 2023. LLY pays $4.52 annually as dividends. This translates to a yield of 1.26% at the current price, compared to the 4-year average dividend yield of 1.65%.
LLY’s revenue increased 2.5% year-over-year to $6.94 billion in the third quarter, which ended September 30, 2022. The company’s non-GAAP net income increased 10.8% year-over-year to $1.79 billion, while its non-GAAP EPS rose 11.8% year-over-year to $1.98.
Analysts expect LLY’s revenue for the fiscal second quarter ending June 2023 to be $7.27 billion, indicating a 12% year-over-year growth. The company’s EPS for the same quarter is expected to increase 52.1% from the prior-year quarter to $1.90. Additionally, it has topped consensus revenue estimates in three of the trailing four quarters, which is impressive.
The stock has gained 46.5% over the past year to close the last trading session at $357.60.
LLY’s POWR Ratings reflect its promising outlook. 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, with each factor weighted to an optimal degree.
LLY also has a B grade for Stability, Sentiment, and Quality. It is ranked #23 of 168 stocks in the Medical – Pharmaceuticals industry.
To access additional ratings for LLY’s Growth, Value, and Momentum, click here.
AstraZeneca PLC (AZN)
Headquartered in Cambridge, United Kingdom. AZN specializes in researching, developing, producing, and commercializing prescription medicines. The company also helps general practitioners and specialists worldwide through distributors and regional representative offices.
On January 11, AZN announced that its AIRSUPRA, formerly known as PT027, has been approved in the U.S. for the as-needed treatment or prevention of bronchoconstriction and to reduce the risk of exacerbations in people with asthma aged 18 years and older. This might help increase the revenue of the company.
On November 29, AZN announced an agreement to purchase Neogene Therapeutics Inc. Neogene is a global clinical-stage biotechnology business that pioneered the research, development, and production of next-generation T-cell receptor medicines (TCR-Ts).
Neogene’s top-tier TCR discovery abilities and vast manufacturing expertise will supplement the cell therapy capabilities AZN has acquired over the previous three years and enable the business to quicken the development of potentially curative cell therapies.
AZN pays a $0.93 per share dividend annually, which translates to a 1.31% yield on the current price. Its dividend payments have grown at a CAGR of 1.2% over the past three years. The company has a four-year average dividend yield of 2.70%.
For the fiscal 2022 third quarter ended September 30, 2022, AZN’s total revenue increased 11.3% year-over-year to $10.98 billion. Its EBITDA grew 131.5% year-over-year to $2.58 billion. In addition, the company’s EPS came in at $1.06, compared to a loss per share of $1.10 in the year-ago quarter.
AZN’s revenue is expected to rise 18.8% year-over-year to $44.47 billion for the to-be-reported fiscal year ended December 2022. The company’s EPS for the same period is expected to increase 58.8% year-over-year to $4.20.
Shares of AZN have gained 25.9% over the past three months to close the last trading session at $70.74.
AZN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
The stock has a B grade for Growth and Sentiment. Within the same industry, it is ranked #17.
Beyond what is stated above, we’ve also rated AZN for Value, Stability, Quality, and Momentum. Get all AZN ratings here.
Zoetis Inc. (ZTS)
ZTS is engaged in discovering, developing, and manufacturing animal health medicines, vaccines, and diagnostic products in the United States and internationally. Its target market primarily includes livestock producers, veterinarians, and retail outlets.
On December 8, ZTS declared a dividend of $0.375 per share for the first quarter of 2023, an increase of 15% from the quarterly dividend rate paid last year. The dividend will be paid on March 1, 2023. The company pays a $1.50 dividend annually, which translates to a yield of 0.94% at the current price, higher than the 4-year average dividend yield of 0.57%.
ZTS revenue rose marginally year-over-year to $2 billion in the third quarter that ended September 30, 2022. The company’s adjusted net income came in at $566 million, or $1.21 per share. Also, it’s selling, general and administrative expenses came in at $501 million, down marginally from the prior-year quarter.
Street EPS estimate for the fiscal fourth quarter (ended December 2022) of $1.15 reflects a rise of 14.7% year-over-year. Likewise, its revenue estimate for the same quarter of $2 billion indicates an improvement of 1.9% from the prior-year period. Additionally, ZTS has topped consensus revenue estimates in three of the trailing four quarters.
The stock has gained 10.5% over the past month to close the last trading session at $159.57.
ZTS’ robust prospect is reflected in its POWR Ratings. The stock has an overall B rating, equating to Buy in our proprietary rating system.
ZTS has an A grade for Quality. It is ranked #28 in the same industry.
Click here to see the additional POWR Ratings for ZTS (Growth, Value, Momentum, Sentiment, and Stability).
Teva Pharmaceutical Industries Limited (TEVA)
TEVA is a pharmaceutical company based in Israel. The company operates through three segments: North America; Europe; and International Markets.
On November 14, TEVA announced a new collaboration with Rimidi, a leading clinical management platform, and HealthSnap, a leading full-service Virtual Care Management Platform for chronic disease management.
The collaboration will enable healthcare providers to better integrate patient data into their workflows, supporting proactive remote care across large populations, which should bode well for TEVA.
During the third quarter of fiscal 2022 ended September 30, 2022, TEVA’s revenue came in at $3.60 million, while its operating income came in at $419 million. Non-GAAP net income attributable to TEVA increased 1.1% year-over-year to $658 million, and non-GAAP earnings per share attributable to the company amounted to $0.59.
Analysts expect TEVA’s EPS for the first quarter ending March 2023 to be $0.57, indicating a 3.5% year-over-year growth. Additionally, TEVA has topped consensus EPS estimates in three of the trailing four quarters.
The stock has gained 57.2% over the past six months, closing the last trading session at $11.02.
TEVA has an overall rating of B, which equates to a Buy in our POWR Ratings system.
It has a grade A for Growth and Value. TEVA is ranked #31 in the same industry.
In addition to the POWR ratings stated above, we have also rated TEVA for Momentum, Stability, Sentiment, and Quality. Get all the TEVA ratings here.
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LLY shares were trading at $354.98 per share on Wednesday morning, down $2.76 (-0.77%). Year-to-date, LLY has declined -2.97%, versus a 3.13% 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. More...
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