Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 stocks made the list for top value stocks in the Pharmaceuticals industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Latest Pharmaceuticals Stock News

Before choosing which top Pharmaceuticals stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

The outlook for the Pharmaceuticals sub-industry is positive as the world returns to normalcy and demand for electives and improved medical utilization. COVID-19 therapies, oncology and immunology are essential aspects of pharmaceutical companies. Should COVID-19 variants continue to arise getting a COVID-19 vaccine could become a seasonal phenomenon, much like the flu vaccine. If that were to happen, it would prove to be very lucrative for pharmaceutical companies, as it would generate recurring sales. Recent FDA recommendations, such as approval for a fourth booster dose for those aged 50 or older, suggests we may be moving in this direction. Generic drug makers are expected to continue to struggle due to lower-cost emerging market competition. Despite this, policy risks are on the rise. Lowering drug prices continues to be a bipartisan issue as both parties aim to offer Americans more affordable prices. While this provides uncertainty in the long-term, it is unlikely that legislation will get passed in the near future due to more pressing issues in the political agenda. Year to date through June 3, the S&P Pharmaceuticals Index was up 1.5% vs. a 13.6% decline for the S&P Composite 1500 Index. In 2021, the S&P Pharmaceuticals Index returned a gain of 21.8%, vs. a gain of 26.7% for the S&P Composite 1500.

Why Focus on Undervalued Pharmaceuticals Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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6 Undervalued Pharmaceuticals Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 6 undervalued stocks in the Pharmaceuticals industry for Wednesday, December 20, 2023. Let’s take a closer look at their individual scores to see how they measure up against each other and the Pharmaceuticals industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Acasti Pharma Inc’s Value Grade

Value Grade:

Acasti Pharma Inc. is a Canada-based late-stage biopharma company with drug candidates addressing rare and orphan diseases. The Company is targeting three underserved orphan diseases: GTX-104, an intravenous infusion targeting subarachnoid hemorrhage (SAH), a rare and life-threatening medical emergency, in which bleeding occurs over the surface of the brain in the subarachnoid space between the brain and skull; GTX-102, an oral mucosal spray targeting ataxia-telangiectasia (A-T), a progressive, neurodegenerative genetic disease that primarily impacts children causing severe disability; and GTX-101, a topical spray, targeting postherpetic neuralgia, a persistent and often debilitating neuropathic pain caused by nerve damage from the varicella zoster virus (shingles). The Company’s clinical assets have each been granted Orphan Drug Designation by the FDA, which provides seven years of marketing exclusivity post-launch in the United States, and additional intellectual property protection.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Acasti Pharma Inc has a Value Score of 93, which is considered to be undervalued.

Now, let’s assess Acasti Pharma Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 0.4, when compared to the industry median of 9.7, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Acasti Pharma Inc’s shareholder yield is higher than its industry median ratio of (3.37%). Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Acasti Pharma Inc’s price-to-book ratio is lower than its industry median ratio of 1.79. This could make Acasti Pharma Inc more attractive to investors looking for a new addition to their portfolio.

Aptinyx Inc’s Value Grade

Value Grade:

Aptinyx, Inc. is a clinical-stage biopharmaceutical company. The Company is focused on the discovery, development, and commercialization of proprietary, synthetic small molecules for the treatment of brain and nervous system disorders. The Company focuses on targeting and modulating N-methyl-D-aspartate receptors, (NMDArs), which are vital to the normal and effective function of the brain and nervous system. The Company's NYX-783 is in Phase 1 clinical development for the treatment of opioid use disorder (OUD), and in preclinical development for the treatment of alcohol use disorder. NYX-783 modulates NMDA receptors to increase glutamatergic activity in key regions and may act to enhance extinction learning and alleviate the emotional symptoms of opioid withdrawal. The Company's NMDAr modulator discovery platform builds on NMDAr biology. The platform has the potential to develop into a broad pipeline and product portfolio across an array of disorders of the brain and nervous system.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Aptinyx Inc has a Value Score of 97, which is considered to be undervalued.

Aptinyx Inc’s price-to-book ratio is higher than its peers. This could make Aptinyx Inc less attractive for value investors when compared to the industry median at 1.79.

You can read more about Aptinyx Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Cumberland Pharmaceuticals, Inc.’s Value Grade

Value Grade:

Cumberland Pharmaceuticals Inc. is a specialty pharmaceutical company. The Company is focused on the acquisition, development and commercialization of branded prescription pharmaceutical products. Its portfolio of brands includes Acetadote injection, for the treatment of acetaminophen poisoning; Caldolor injection, for the treatment of pain and fever, Kristalose for oral solution, a prescription laxative, for the treatment of constipation, and Omeclamox-Pak, oral, for the treatment of Helicobacter pylori infection and related duodenal ulcer disease. Its brands also include RediTrex injection, for the treatment of active rheumatoid, juvenile idiopathic and severe psoriatic arthritis, as well as disabling psoriasis; Sancuso transdermal, for the prevention of nausea and vomiting in patients receiving certain types of chemotherapy treatment; Vaprisol injection, to raise serum sodium levels in hospitalized patients with euvolemic and hypervolemic hyponatremia, and Vibativ injection.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Cumberland Pharmaceuticals, Inc. has a Value Score of 95, which is considered to be undervalued.

Cumberland Pharmaceuticals, Inc.’s price-to-book ratio is higher than its peers. This could make Cumberland Pharmaceuticals, Inc. less attractive for value investors when compared to the industry median at 1.79.

You can read more about Cumberland Pharmaceuticals, Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Kiora Pharmaceuticals Inc’s Value Grade

Value Grade:

Kiora Pharmaceuticals, Inc. is a clinical-stage pharmaceutical company. The Company is focused on developing and commercializing therapies for the treatment of ophthalmic diseases. Its pipeline consists of three product candidates, including KIO-101, KIO-301, and KIO-201. Its lead product, KIO-301, is a vision-restoring small molecule that is designed to restore vision in patients with inherited and age-related degenerative retinal diseases, including retinitis pigmentosa (RP). KIO-101 focuses on treating the ocular manifestation of patients with autoimmune diseases, including rheumatoid arthritis, and as such is termed the Ocular Presentation of Rheumatoid Arthritis and Other Autoimmune Diseases (OPRA+). KIO-101 is a next-generation, non-steroidal, immuno-modulatory, small-molecule inhibitor of dihydroorotate dehydrogenase. KIO-201 is a synthetic modified hyaluronic acid (HA) capable of coating the ocular surface and designed to resist degradation under conditions present in the eye.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Kiora Pharmaceuticals Inc has a Value Score of 71, which is considered to be undervalued.

Kiora Pharmaceuticals Inc’s price-to-book ratio is higher than its peers. This could make Kiora Pharmaceuticals Inc less attractive for value investors when compared to the industry median at 1.79.

You can read more about Kiora Pharmaceuticals Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Moleculin Biotech Inc’s Value Grade

Value Grade:

Moleculin Biotech, Inc. is a clinical-stage pharmaceutical company. The Company has a pipeline of clinical programs for the treatment of tumors and viruses. It has three core technologies and six drug candidates, three of which have shown human activity in clinical trials. Its core technologies consist of Annamycin, WP1066 Portfolio and WP1122 Portfolio. Annamycin is designed to avoid multidrug resistance mechanisms and cardiotoxicity. Its WP1066 Portfolio (including lead drug candidates WP1066 and WP1220) represents a class of agents capable of hitting multiple targets, including the activated form of a key oncogenic transcription factor, STAT3. WP1066 is its flagship Immune/Transcription Modulator. An analog of WP1066, referred to as WP1220, is related to the use of the molecule in the topical treatment of psoriasis. Annamycin is in development for the treatment of refractory acute myeloid leukemia (AML) and soft tissue sarcoma (STS) lung metastases.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Moleculin Biotech Inc has a Value Score of 85, which is considered to be undervalued.

Moleculin Biotech Inc’s price-to-book ratio is higher than its peers. This could make Moleculin Biotech Inc less attractive for value investors when compared to the industry median at 1.79.

You can read more about Moleculin Biotech Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Sunshine Biopharma Inc’s Value Grade

Value Grade:

Sunshine Biopharma, Inc. is a Canada-based pharmaceutical company. The Company offers and researches life-saving medicines in a variety of therapeutic areas, including oncology and antivirals. The Company has 27 additional generic prescription drugs. In addition, the Company is engaged in the development of various proprietary drugs, including Adva-27a, K1.1 mRNA and SBFM-PL4. Adva-27a is a small chemotherapy molecule targeting pancreatic cancer. The K1.1 mRNA is developed for liver cancer. SBFM-PL4 is an anti-coronavirus compound. The Company operates through two segments: Prescription Generic Pharmaceuticals (Generic Pharmaceuticals) and Nonprescription Over-The-Counter Products (OTC Products). It also operates two wholly owned subsidiaries: NoraPharma Inc., which has a portfolio consisting of 50 generic prescription drugs on the market in Canada, and Sunshine Biopharma Canada Inc., which develops and sells non-prescription over-the-counter (OTC) products.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Sunshine Biopharma Inc has a Value Score of 86, which is considered to be undervalued.

Sunshine Biopharma Inc’s price-to-book ratio is higher than its peers. This could make Sunshine Biopharma Inc less attractive for value investors when compared to the industry median at 1.79.

You can read more about Sunshine Biopharma Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Pharmaceuticals Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Pharmaceuticals stocks as well as other industrys.

Choosing Which of the 6 Best Pharmaceuticals Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Acasti Pharma Inc stock has a Value Grade of A.
• Aptinyx Inc stock has a Value Grade of A.
• Cumberland Pharmaceuticals, Inc. stock has a Value Grade of A.
• Kiora Pharmaceuticals Inc stock has a Value Grade of B.
• Moleculin Biotech Inc stock has a Value Grade of A.
• Sunshine Biopharma Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 6 undervalued stocks in the Pharmaceuticals industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Pharmaceuticals Stocks

Want to learn more about Pharmaceuticals stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 6 Undervalued Pharmaceuticals Stocks for Wednesday, December 20
• What You Need to Know About AbbVie Inc's Q3 Earnings
• What You Need to Know About Amgen, Inc.'s Q3 Earnings
• What You Need to Know About Amneal Pharmaceuticals Inc's Q3 Earnings

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