Over the last few years, the healthcare sector has witnessed a significant increase in demand due to rising chronic diseases and an aging global population. Pharmaceutical and biotech companies maintained a stable performance this year despite the broader market challenges.
Furthermore, the expansion of virtual health services, such as mobile health, telehealth and telemedicine, and health information technology (IT), is expected to contribute significantly to the industry's growth. The global eHealth market is expected to grow at a CAGR of 16.5% between 2020 and 2030.
Given this backdrop, we think it could be wise to invest in quality healthcare stocks Pfizer Inc. (PFE), GSK Plc (GSK), and TEVA Pharmaceutical Industries Limited (TEVA), which are currently trading under $50.
Pfizer Inc. (PFE)
PFE is a well-known biopharmaceutical product developer and distributor of medications, vaccines, and other therapies. Pfizer gained popularity among investors after the breakthrough in countering the Covid-19 pandemic through its COVID-19 vaccine developed in collaboration with BioNTech SE (BNTX).
This month, PFE announced that its investigational Group B Streptococcus (GBS) vaccine candidate, GBS6 or PF-06760805, has received Breakthrough Therapy Designation from the US Food and Drug Administration.
Also, this month, FDA and EMA accepted the regulatory submission of PFE’s Ritlecitinib for Individuals 12 years and older with Alopecia Areata. The FDA is expected to make a decision in the second quarter of 2023, while the European Medicines Agency (EMA) accepted the Marketing Authorization Application, with a decision expected in the fourth quarter of 2024.
PFE’s revenue increased 46.8% year-over-year to $27.7 billion for the second quarter ended July 03, 2022. Its net income improved 78% year-over-year to $9.91 billion. The company’s EPS increased 77% from the year-ago value to $1.73.
Its EPS is expected to grow 12.3% year-over-year to $1.51 in the current quarter ending September 2022. The stock has gained 3.93% over the past year to close its last trading session at $47.84.
PFE’s POWR Ratings reflect a promising outlook. The company has an overall rating of A, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
PFE also rated an A grade for Value and a B for Quality and Sentiment. Within the F-rated Medical – Pharmaceuticals industry, it is ranked #8 of 168 stocks.
To see additional POWR Ratings for Growth, Stability, and Momentum for PFE, click here.
GSK Plc (GSK)
Headquartered in Brentford, the United Kingdom, GSK and its subsidiaries discover, manufacture, and market pharmaceutical products, vaccines, over-the-counter medicines, and health-related consumer products globally. It operates through four segments: Pharmaceuticals; Pharmaceuticals R&D; Vaccines; and Consumer Healthcare.
Last month, Mersana Therapeutics, Inc. (MRSN), a clinical-stage biopharmaceutical company focused on discovering and developing a pipeline of antibody-drug conjugates (ADCs) targeting cancers with high unmet medical needs, announced a global collaboration that provides GSK the exclusive option to co-develop and commercialize XMT-2056, an Immunosynthen ADC that targets a novel HER2 epitope.
During the second quarter ended June 29, 2022, GSK’s gross profit increased 15.08% year-over-year to £475.3 billion ($5.51 billion). Its operating profit came in at £1.08 billion ($1.25 billion). The company reported a net profit of £975 million ($1.13), while its adjusted EPS grew 23% year-over-year to £34.7. The stock closed its last trading session at $32.73.
It is no surprise that GSK has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has an A grade for Value and a B for Quality. In the same industry, it is ranked #18.
In addition to the POWR Ratings grades I have just highlighted, you can see GSK ratings for Growth, Momentum, Stability, and Sentiment.
TEVA Pharmaceuticals Industries Limited (TEVA)
TEVA is an Israel-based pharmaceutical company that manufactures generic, specialty, and over-the-counter (OTC) products in North America, Europe, and International markets. Additionally, it has partnered with MedinCell to develop and commercialize several long-acting injectable products, including a risperidone suspension for treating schizophrenia patients.
Last month, TEVA announced that the European Commission (EC) had granted a Marketing Authorization for Ranivisio (ranibizumab), a biosimilar of the ophthalmology treatment Lucentis, across all five indications in adults for which Lucentis is approved.
For the second quarter ended June 30, 2022, TEVA’s net revenue came in at $3.79 billion. Its gross profit came in at $1.79 billion. The company’s cash flow generated from operating activities amounted to $123 million, while its non-GAAP EPS came in at $0.68.
Analysts expect its EPS to grow 4.8% year-over-year to $0.62 in the current quarter ending September 2022. Moreover, the company has an impressive earnings surprise history, as it topped Street EPS estimates in three of the trailing four quarters. The company’s shares have gained 14.5% year-to-date and 17.3% over the past six months to close its last trading session at $9.17.
TEVA’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our rating system. TEVA also has an A grade for Growth and Value and a B for Sentiment. The stock is ranked #22 in the same industry.
Beyond the POWR Ratings grades I have just highlighted, you can see TEVA ratings for Stability, Quality, and Momentum.
PFE shares were trading at $47.76 per share on Monday afternoon, down $0.08 (-0.17%). Year-to-date, PFE has declined -17.20%, versus a -12.83% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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