The stock market has been suffering due to sky-high inflation, the Fed’s rate hikes, and mounting recession fears. The CBOE Volatility Index is up 57% year-to-date. However, the pharma industry has performed relatively steadily due to the inelastic demand for its products.  

Moreover, demand for pharma goods and services has increased significantly in the past few years. The pharmaceutical industry is expected to increase to $1.50 trillion by 2023.

The industry’s growth in the coming years is expected to be driven by rising health awareness, an aging population, and an increase in chronic diseases. Investors’ interest in pharma stocks is evident from the SPDR S&P Pharmaceuticals ETF’s (XPH) 4% gains over the past month.

Given the backdrop, investors could consider buying fundamentally-sound pharma stocks Eli Lilly and Company (LLY) and Bristol-Myers Squibb Company (BMY) this fall.

Eli Lilly and Company (LLY)

LLY is engaged in the discovery, development, manufacturing, marketing, and sales of pharmaceutical products worldwide. Its subsidiaries include Acanthas Pharma, Inc., Alnara Pharmaceuticals, Inc., ARMO Biosciences, Inc., and Avid Radiopharmaceuticals, Inc.

On October 18, 2022, LLY announced its agreement to acquire Akouos, Inc. (AKUS), a precision genetic medicine company. Under this agreement, LLY will help AKUS develop advanced adeno-associated viral gene therapies to treat inner ear conditions. This partnership is expected to be a milestone in hearing treatment.

LLY’s total liabilities came in at $47.06 billion for the period ended June 30, 2022, compared to $48.81 billion for the period ended December 31, 2021. Its long-term debt came in at $14.69 billion, compared to $15.35 billion for the same period.

LLY’s revenue is expected to increase by 12.4% year-over-year to $28.82 billion in 2022. Its EPS is expected to grow 8% year-over-year to $7.98 in 2023. Over the past year, the stock has gained 42.1% to close the last trading session at $359.90.

LLY’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall B rating indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

LLY has a B for Growth, Stability, and Quality. In the Medical – Pharmaceuticals industry, it is ranked #21 out of 164 stocks. Click here for the additional POWR Ratings for Value, Sentiment, and Momentum for LLY.

Bristol-Myers Squibb Company (BMY)

BMY engages in the global discovery, development, licensing, manufacture, and sale of biopharmaceutical products. The company’s offerings include products for hematology, oncology, cardiovascular, immunology, fibrotic, neuroscience, and COVID-19 diseases.

On October 27, 2022, BMY and Obsidian Therapeutics, Inc., (Obsidian’s) a clinical-stage biotechnology company, extended their partnership to co-develop the novel, regulated cell therapies that utilize Obsidian’s cytoDRiVE® technology for the controlled expression of the immune enhancer CD40L. This product is expected to be a game changer in treating people with various malignancies.

On October 4, 2022, BMY and Autolus Therapeutics plc (AUTL) agreed that BMY would receive access to AUTL’s RQR8 safety switch for cell therapy programs on a target-by-target basis for cancer treatment. This should help BMY advance in cell therapy and cancer treatment.

BMY’s total expenses came in at $9.01 billion for the third quarter that ended September 30, 2022, down 4.8% year-over-year. Moreover, its net earnings came in at $1.61 billion, up 3.9% year-over-year. Its EPS came in at $0.75, up 8.7% year-over-year.

BMY’s revenue is expected to increase by 2.6% year-over-year to $47.2 billion in 2023. Its EPS is expected to grow 4.6% year-over-year to $7.95 in 2023. It surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 34.5% to close the last trading session at $76.83.

BMY has an overall A rating, equating to a Strong Buy in our POWR Ratings system. It has a B for Value, Stability, and Sentiment. It is ranked #13 in the same industry.

Beyond what is stated above, we’ve also rated BMY for Growth, Quality, and Momentum. Get all BMY ratings here.

LLY shares were trading at $361.73 per share on Monday afternoon, up $1.83 (+0.51%). Year-to-date, LLY has gained 32.38%, versus a -17.67% rise in the benchmark S&P 500 index during the same period.

About the Author: Rashmi Kumari

Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...

More Resources for the Stocks in this Article