The pharmaceutical sector played a critical role during the pandemic. Moreover, the industry is predicted to grow with an ageing population and the rise of chronic diseases. According to Statista, global pharmaceutical revenue is expected to expand at a 5.4% CAGR to $1.44 trillion by 2027.
Furthermore, pharmaceutical businesses and vendors of AI technology have been increasing their affiliations and collaborations. Also, last year, U.S. healthcare facilities and providers spent $17.9 billion on cloud-based technologies; in 2026, that value is projected to increase to $29.15 billion. The adoption of emerging technologies is expected to boost the industry’s prospects.
In addition, relatively inelastic demand for healthcare products and services makes this sector recession-proof to a large degree and helps garner significant investors’ attention amid market uncertainties. Investors’ interest in pharmaceutical stocks is evident from the VanEck Vectors Pharmaceutical ETF’s (PPH) 10.3% returns over the past three months and 2.8% over the past six months.
Johnson & Johnson (JNJ)
JNJ and its subsidiaries research, develop, manufacture, and sell various products in the healthcare field worldwide. The company operates through three segments: Consumer Health; Pharmaceutical; and Medical Devices.
On November 1, 2022, JNJ and Abiomed Inc. (ABMD), a world leader in breakthrough heart, lung, and kidney support technologies, announced their definitive agreement under which JNJ will acquire through a tender offer all outstanding shares of ABMD, for an upfront payment of $380.00 per share in cash.
This collaboration is expected to help JNJ implement its strategic priorities and improve its focus on the Pharmaceutical and MedTech segments.
JNJ has paid dividends for 60 consecutive years. Over the last three years, JNJ’s dividend payouts have grown at a 5.9% CAGR. While JNJ’s four-year average dividend yield is 2.60%, its current dividend translates to a 2.69% yield.
JNJ’s consumer health segment revenue came in at $3.77 billion for the fiscal year 2022 fourth quarter, up marginally year-over-year. Moreover, its adjusted net earnings came in at $6.22 billion, representing a 9.5% year-over-year increase. Its EPS increased 10.3% year-over-year to $2.35.
JNJ’s revenue is expected to increase 2.9% year-over-year to $97.77 billion in 2023. Its EPS is expected to grow 2.9% year-over-year to $10.34 in 2023. It surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 5.5% to close the last trading session at $168.31.
JNJ’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
JNJ has an A grade for Stability and a B for Value and Quality. Within the Medical – Pharmaceuticals industry, it is ranked #10 out of 169 stocks. Click here for the additional POWR Ratings for Sentiment, Growth, and Momentum for JNJ.
Biopharmaceutical company ABBV engages in the research, development, manufacturing, commercialization, and sale of medicines worldwide. The company’s products are segmented into Immunology; Oncology; Anaesthetics; Neuroscience; Eyecare; Women’s Health; and Others.
On January 10, 2023, ABBV and Anima Biotech (Anima) partnered to identify and develop mRNA biology modulators for three Oncology and Immunology targets.
Anima will employ its mRNA Lightning technology to find novel mRNA biology modulators against the collaboration targets, with ABBV retaining exclusive rights to license, develop, and market the initiatives. Both companies are expected to be mutual beneficiaries of this venture.
On January 9, 2023, ABBV declared that QULIPTA had received approval from Health Canada for the treatment of people with episodic migraine. The newest addition to the company’s migraine treatment portfolio QULIPTA, the first and only oral calcitonin gene-related peptide receptor antagonist, should be a breakthrough in ABBV’s portfolio.
ABBV has paid dividends for nine consecutive years. Over the last three years, ABBV’s dividend payouts have grown at 9.2% CAGR. While ABBV’s four-year average dividend yield is 4.62%, its current dividend translates to a 3.99% yield.
ABBV’s net revenues came in at $14.81 billion for the third quarter that ended September 30, 2022, up 3.3% year-over-year. Its net earnings increased 24.2% year-over-year to $3.95 billion. In addition, its EPS increased 29.3% year-over-year to $3.66.
Street expects ABBV’s revenue to increase 3.8% year-over-year to $58.28 billion for the yet-to-be-reported fiscal year 2022. Its EPS is expected to increase 16.6% year-over-year to $13.79 for the same period. It surpassed EPS estimates in three of four trailing quarters. Over the past year, the stock has gained 11.8% to close the last trading session at $147.69.
ABBV has an overall rating of A, equating to a Strong Buy in our POWR Ratings system. It also has an A grade for Quality and a B for Growth and Value.
It is ranked #7 in the Medical – Pharmaceuticals industry. Click here to access the additional POWR Ratings for ABBV (Stability, Momentum, and Stability).
Pfizer Inc. (PFE)
PFE discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. The company serves wholesalers, retailers, hospitals, clinics, government agencies, pharmacies, individual provider offices, and disease control and prevention centers.
On December 14, 2022, PFE and China Meheco Group Co Ltd. (China Meheco) signed an agreement under which China Meheco will import and distribute PFE’s oral COVID-19 treatment Paxlovid in mainland China amid the resurgence of covid cases. This deal is expected to boost the company’s revenue streams.
PFE has paid dividends for 33 consecutive years. Over the last three years, PFE’s dividend payouts have grown at a 5.5% CAGR. While PFE’s four-year average dividend yield is 3.63%, and its current dividend translates to a 3.65% yield.
PFE’s income from continuing operations came in at $8.65 billion for the third quarter that ended October 2, 2022, up 5.8% year-over-year. Its net income came in at $8.61 billion, up 5.7% year-over-year, while its EPS came in at $1.51, up 6.3% year-over-year.
Analysts expect PFE’s revenue to increase 23.3% year-over-year to $100.24 billion for the yet-to-be-reported fiscal year 2022, while its EPS is expected to increase 46.4% year-over-year to $6.47. It surpassed EPS estimates in all four trailing quarters. PFE’s shares have lost marginally intraday to close the last trading session at $44.71.
It’s no surprise that PFE has an overall A rating, equating to a Strong Buy in our POWR Ratings system. It has an A grade for Value and a B for Growth and Quality. It is ranked #8 in the same industry.
Beyond what is stated above, we’ve also rated PFE for Momentum, Sentiment, and Stability. Get all PFE ratings here.
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PFE shares were trading at $45.01 per share on Wednesday afternoon, up $0.30 (+0.67%). Year-to-date, PFE has declined -12.16%, versus a 3.83% rise in the benchmark S&P 500 index during the same period.
About the Author: RashmiKumari
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...
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