Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 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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5 Undervalued Pharmaceuticals Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Pharmaceuticals industry for Thursday, February 01, 2024. 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 (3.63%). 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 1.82. This could make Acasti Pharma Inc more attractive to investors looking for a new addition to their portfolio.

Akanda Corp’s Value Grade

Value Grade:

Akanda Corp. is an international medical cannabis and wellness platform company. The Company operates through three segments: Cultivation, Distribution and Corporate. The Cultivation segment is focused on the cultivation of medical cannabis and medical cannabis biomass. The Distribution segment undertakes the sale and distribution of medical cannabis products. Its portfolio includes Holigen, a Portugal-based cultivator, manufacturer, and distributor with an indoor growing facility, and CanMart, a United Kingdom-based fully licensed pharmaceutical importer and distributor which supplies pharmacies and clinics within the United Kingdom. Holigen consists of a 20,000 square foot indoor facility located near Lisbon dedicated to the cultivation of high-tetrahydrocannabinol (THC) cannabis. Its supply chain includes Cansativa Group, an importer and distributor of medical cannabis in Europe, and Cellen Life Sciences Leva Clinic, which is a fully digital pain clinic in the United Kingdom.

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.

Akanda Corp has a Value Score of 73, which is considered to be undervalued.

Akanda Corp’s price-to-book ratio is higher than its peers. This could make Akanda Corp less attractive for value investors when compared to the industry median at 1.82.

You can read more about Akanda Corp’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.

Assertio Holdings Inc’s Value Grade

Value Grade:

Assertio Holdings, Inc. is a commercial pharmaceutical company offering differentiated products to patients utilizing a non-personal promotional model. Its commercial portfolio of branded products focuses on three areas: neurology, rheumatology, and pain and inflammation. Its primary marketed products include INDOCIN (indomethacin) Suppositories, INDOCIN (indomethacin) Oral Suspension, Otrexup (methotrexate) injection for subcutaneous use, Sympazan (clobazam) oral film, SPRIX (ketorolac tromethamine) Nasal Spray, CAMBIA (diclofenac potassium for oral solution) and Zipso (diclofenac potassium) Liquid filled capsules. It also offers OXAYDO (oxycodone HCI, USP) tablets. INDOCIN (indomethacin) Suppositories are nonsteroidal anti-inflammatory drug (NSAID), indicated for moderate to severe rheumatoid arthritis, including acute flares of chronic diseases, moderate to severe ankylosing spondylitis and others. Its portfolio also includes ROLVEDON (eflapegrastim-xnst) Injection asset.

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.

Assertio Holdings Inc has a Value Score of 91, which is considered to be undervalued.

Assertio Holdings Inc’s price-to-book ratio is higher than its peers. This could make Assertio Holdings Inc less attractive for value investors when compared to the industry median at 1.82.

You can read more about Assertio Holdings 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.

Eagle Pharmaceuticals Inc’s Value Grade

Value Grade:

Eagle Pharmaceuticals, Inc. is a fully integrated pharmaceutical company with research and development, clinical, manufacturing and commercial capabilities. The Company is focused on developing medicines that result in improvements in patients' lives. The Company's commercialized products include vasopressin, PEMFEXY, RYANODEX, BENDEKA, BELRAPZO, TREAKISYM (Japan), and BYFAVO and BARHEMSYS through its wholly owned subsidiary Acacia Pharma Inc. Its oncology and central nervous system (CNS)/metabolic critical care pipeline includes product candidates with the potential to address underserved therapeutic areas across multiple disease states. The Company also has a research and development facility in Cambridge, Massachusetts. The Company has office space in Palm Beach Gardens, Florida and Indianapolis, Indiana. The Company?s subsidiaries include Eagle Biologics, Inc., Eagle Research Lab Limited, Acacia Pharma Group plc, Acacia Pharma Limited and Acacia Pharma Inc.

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.

Eagle Pharmaceuticals Inc has a Value Score of 94, which is considered to be undervalued.

Eagle Pharmaceuticals Inc’s price-earnings ratio is 6.4 compared to the industry median at 25.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Eagle Pharmaceuticals Inc more attractive for value investors.

Eagle Pharmaceuticals Inc’s price-to-book ratio is higher than its peers. This could make Eagle Pharmaceuticals Inc less attractive for value investors when compared to the industry median at 1.82.

You can read more about Eagle 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.

Viatris Inc’s Value Grade

Value Grade:

Viatris Inc. (Viatris) is a global healthcare company. The Company's segments include Developed Markets, Greater China, JANZ, and Emerging Markets. Its Developed Markets segment comprises its operations primarily in North America and Europe. The Greater China segment includes its operations in mainland China, Taiwan and Hong Kong. The JANZ segment consists of its operations in Japan, Australia and New Zealand. The Emerging Markets segment encompasses its presence in more than 125 countries with developing markets and emerging economies, as well as the Company?s ARV franchise. Its portfolio comprises over 1,400 approved molecules across a range of key therapeutic areas, including key brands and complex generics. It operates around 40 manufacturing sites worldwide, which produce oral solid doses, injectables, complex dosage forms and active pharmaceutical ingredients. Its products include Lyrica, Lipitor, Creon, Influvac, Wixela Inhub, EpiPen Auto Injector, Fraxiparine and Yupelri.

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.

Viatris Inc has a Value Score of 94, which is considered to be undervalued.

Viatris Inc’s price-earnings ratio is 7.8 compared to the industry median at 25.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Viatris Inc more attractive for value investors.

Viatris Inc’s price-to-book ratio is higher than its peers. This could make Viatris Inc less attractive for value investors when compared to the industry median at 1.82.

You can read more about Viatris 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 5 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.
• Akanda Corp stock has a Value Grade of B.
• Assertio Holdings Inc stock has a Value Grade of A.
• Eagle Pharmaceuticals Inc stock has a Value Grade of A.
• Viatris Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 5 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.

• 5 Undervalued Pharmaceuticals Stocks for Thursday, February 01
• 3 Undervalued Pharmaceuticals Stocks for Wednesday, January 31
• What You Need to Know About Novo Nordisk A/S (ADR)'s Q4 Earnings
• What You Need to Know About Teva Pharmaceutical Industries Ltd (ADR)'s Q4 Earnings

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