Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 7 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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7 Undervalued Pharmaceuticals Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 7 undervalued stocks in the Pharmaceuticals industry for Thursday, February 08, 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.

China Pharma Holdings Inc’s Value Grade

Value Grade:

China Pharma Holdings Inc is a company principally engaged in the development, manufacture and marketing of pharmaceutical products. The Company's products are for human use in connection, and with a variety of high-incidence and high-mortality diseases and medical conditions prevalent. The Company manufactures pharmaceutical products in the form of dry powder injectables, liquid injectables, tablets, capsules, and cephalosporin oral solutions. In addition, the Company is also engaged in the production of comprehensive healthcare products and protective 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.

China Pharma Holdings Inc has a Value Score of 73, which is considered to be undervalued.

When you look at China Pharma Holdings Inc’s price-to-sales ratio at 0.15 compared to the industry median at 2.43, this company has a lower price relative to revenue compared to its peers. This could make China Pharma Holdings Inc’s stock more attractive for value investors.

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. China Pharma Holdings Inc’s shareholder yield is lower than its industry median ratio of (3.46%). 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. China Pharma Holdings Inc’s price-to-book ratio is lower than its industry median ratio of 1.84. This could make China Pharma Holdings Inc more attractive to investors looking for a new addition to their portfolio.

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 5.7 compared to the industry median at 25.3. 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 1.84.

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.

I-Mab ADR’s Value Grade

Value Grade:

I-Mab is a China-based company mainly engaged in the development of innovative global biotechnology. The Company's main businesses include engaging in track record in innovation, developing innovative drug candidates and conduct clinical validation of the assets and commercialization. The Company's pipeline is composed of ten clinical-stage assets and ten preclinical assets, among which seven assets have moved to Phase 2 or Phase 3 clinical trial stage. Its pipeline is expected to yield three near-term NDA filings and/or product launches, including felzartamab for multiple myeloma (MM), eftansomatropin alfa for pediatric growth hormone deficiency (PGHD), and potentially lemzoparlimab for myelodysplastic syndromes (MDS) and later for acute myeloid leukemia (AML) and non-Hodgkin's lymphoma (NHL).

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.

I-Mab ADR has a Value Score of 81, which is considered to be undervalued.

I-Mab ADR’s price-to-book ratio is higher than its peers. This could make I-Mab ADR less attractive for value investors when compared to the industry median at 1.84.

You can read more about I-Mab ADR’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.

SCYNEXIS Inc’s Value Grade

Value Grade:

SCYNEXIS, Inc. is a biotechnology company. The Company is developing its lead product candidate, ibrexafungerp, as a broad-spectrum, intravenous (IV)/oral agent for multiple fungal indications in both the community and hospital settings. Its Ibrexafungerp has demonstrated activity against a large collection of medically relevant strains of Candida and Aspergillus genera, including multidrug-resistant strains, as well as Pneumocystis, Coccidioides, Histoplasma and Blastomyces genera. The Company has received approval from the United States Food and Drug Administration (FDA) for the New Drug Application (NDA) for BREXAFEMME (ibrexafungerp tablets) for the treatment of vulvovaginal candidiasis (VVC, also known as vaginal yeast infection), and for the reduction in the incidence of recurrent vulvovaginal candidiasis (RVVC), respectively.

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.

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

SCYNEXIS Inc’s price-earnings ratio is 1.4 compared to the industry median at 25.3. This means that it has a lower price relative to its earnings compared to its peers. This makes SCYNEXIS Inc more attractive for value investors.

SCYNEXIS Inc’s price-to-book ratio is higher than its peers. This could make SCYNEXIS Inc less attractive for value investors when compared to the industry median at 1.84.

You can read more about SCYNEXIS 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.

SNDL Inc’s Value Grade

Value Grade:

SNDL Inc. is a Canada-based private-sector liquor and cannabis retailer in Canada with retail banners, which include Ace Liquor, Wine and Beyond, Liquor Depot, Value Buds, Spiritleaf, and Firesale Cannabis. Its segments include Liquor Retail, Cannabis Retail, Cannabis Operations and Investments. The Liquor Retail segment includes the sale of wines, beers and spirits through liquor stores. The Cannabis Retail segment includes the private sale of recreational cannabis through and franchise retail cannabis stores. The Cannabis Operations segment includes the cultivation, distribution and sale of cannabis for the adult-use and medical markets domestically and for export, and providing cannabis processing services, in addition to product development, manufacturing, and commercialization of cannabis consumer packaged goods. The Investments segment includes the deployment of capital to investment opportunities. Its cannabis brand portfolio includes Top Leaf, Vacay, Grasslands and others.

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.

SNDL Inc has a Value Score of 74, which is considered to be undervalued.

SNDL Inc’s price-to-book ratio is higher than its peers. This could make SNDL Inc less attractive for value investors when compared to the industry median at 1.84.

You can read more about SNDL 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.

Sonoma Pharmaceuticals Inc’s Value Grade

Value Grade:

Sonoma Pharmaceuticals, Inc. is engaged in developing and producing stabilized hypochlorous acid (HOCl), products for a range of applications, including wound care, animal health care, eye care, oral care and dermatological conditions. The Company's product offerings include Regenacyn Advanced Scar Gel, Regenacyn Plus Scar Gel, Rejuvacyn Advanced Skin Repair Cooling Mist, Pediacyn Skin Care, Microcyn, Ocucyn Eyelid and Eyelash Cleanser, Microdacyn60 Oral Care, Podiacyn Advanced Everyday Foot Care, and MicrocynAH. Regenacyn Advanced Scar Gel helps to improve the overall appearance of scars while reducing pain, itch, redness, and inflammation. Regenacyn Plus is a prescription-strength scar gel which is available as an office dispense product through dermatology practices and medical spas. Pediacyn is a pediatric dermatology and wound care product for over-the-counter use. MicrocynAH is a HOCl-based topical product that cleans, debrides and treats a range of animal wounds and infections.

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.

Sonoma Pharmaceuticals Inc has a Value Score of 78, which is considered to be undervalued.

Sonoma Pharmaceuticals Inc’s price-to-book ratio is higher than its peers. This could make Sonoma Pharmaceuticals Inc less attractive for value investors when compared to the industry median at 1.84.

You can read more about Sonoma 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 93, which is considered to be undervalued.

Viatris Inc’s price-earnings ratio is 7.8 compared to the industry median at 25.3. 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 1.84.

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 7 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.

• China Pharma Holdings Inc stock has a Value Grade of B.
• Eagle Pharmaceuticals Inc stock has a Value Grade of A.
• I-Mab ADR stock has a Value Grade of A.
• SCYNEXIS Inc stock has a Value Grade of A.
• SNDL Inc stock has a Value Grade of B.
• Sonoma Pharmaceuticals Inc stock has a Value Grade of B.
• Viatris Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 7 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.

• 7 Undervalued Pharmaceuticals Stocks for Thursday, February 08
• 5 Undervalued Pharmaceuticals Stocks for Wednesday, February 07
• What You Need to Know About McKesson Corp's Q3 Earnings
• What You Need to Know About Phibro Animal Health Corp's Q2 Earnings

AAII Disclaimer

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