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 Friday, February 09, 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.

Biofrontera Inc’s Value Grade

Value Grade:

Biofrontera Inc. is a biopharmaceutical company. The Company is focused on commercializing a portfolio of pharmaceutical products for the treatment of dermatological conditions with a focus on photodynamic therapy (PDT) and topical antibiotics. The Company?s licensed products are used for the treatment of actinic keratoses, which are pre-cancerous skin lesions, as well as impetigo, a bacterial skin infection. Its principal licensed product is Ameluz, which is a prescription drug for use in combination with the BF-RhodoLED lamp series, for photodynamic therapy. In the United States, the PDT treatment is used for the lesion-directed and field-directed treatment of actinic keratoses (AK) of mild-to-moderate severity on the face and scalp. The Company?s other products include Xepi for the treatment of impetigo, a common skin infection, due to Staphylococcus aureus or Streptococcus pyogenes. It is used in the United States in adults and children two months and older.

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.

Biofrontera Inc has a Value Score of 68, which is considered to be undervalued.

When you look at Biofrontera Inc’s price-to-sales ratio at 0.03 compared to the industry median at 2.43, this company has a lower price relative to revenue compared to its peers. This could make Biofrontera 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. Biofrontera Inc’s shareholder yield is lower 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. Biofrontera Inc’s price-to-book ratio is lower than its industry median ratio of 1.82. This could make Biofrontera Inc more attractive to investors looking for a new addition to their portfolio.

Bon Natural Life Ltd’s Value Grade

Value Grade:

Bon Natural Life Ltd is a China-based company principally engaged in the manufacturing and sales of personal care ingredients, such as plant extracted fragrance compounds to perfume and fragrance manufacturers, natural health supplements, such as powder drinks and bioactive food ingredient products mostly used as food additives and nutritional supplements. The Company's product categories include fragrance compounds, health supplements (natural, functional active ingredients for powder drinks) and bioactive food ingredients. Fragrance compounds product category includes clary sage extract products. Bioactive food ingredients include stachyose, milk thistle extracts, apple extracts, phloretin and pomegranate extract products. The Company’s products are applied in the functional food, personal care, cosmetic and pharmaceutical industries.

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.

Bon Natural Life Ltd has a Value Score of 94, which is considered to be undervalued.

Bon Natural Life Ltd’s price-earnings ratio is 0.9 compared to the industry median at 25.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Bon Natural Life Ltd more attractive for value investors.

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

You can read more about Bon Natural Life Ltd’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.

Endexx Corp’s Value Grade

Value Grade:

Endexx Corporation develops hemp-derived, cannabidiol (CBD)-based products, each formulated to address key segments of the health and wellness market. Through its subsidiaries, the Company sells oils, extracts, topicals, and pet products, all with the shared purpose of supporting the therapeutic relief of pain and inflammation for humans and pets through its e-commerce site www.cbdunlimited.com, as well as other online and in-store retailers. In addition to its consumer products, the Company's Gorilla-Tek division offers an automated dispensing system providing a secure method of distributing hemp-based products. The Company also owns and operates a number of subsidiaries that offer technology and consulting solutions to the hemp and hemp-derived product industry, including Seed-to-Shelf compliance and inventory tracking and process management system for regulated products in a front of counter pharmacy support platform.

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.

Endexx Corp has a Value Score of 74, which is considered to be undervalued.

Endexx Corp’s price-earnings ratio is 1.3 compared to the industry median at 25.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Endexx Corp more attractive for value investors.

You can read more about Endexx 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.

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 5.8 compared to the industry median at 25.1. 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.

Shineco Inc’s Value Grade

Value Grade:

Shineco Inc is a holding company. The Company provides health and well-being focused plant-based products by using its subsidiaries' and variable interest entities' vertically and horizontally integrated production, distribution and sales channels. The Company operates through three segments. Luobuma Products segment develops, manufactures and distributes specialized fabrics, textiles and other by-products derived from an indigenous Chinese plant Apocynum Venetum, as well as Luoboma raw materials processing. The Chinese Medicinal Herbal Products segment processes and distributes traditional Chinese medicinal herbal products as well as other pharmaceutical products. The Other Agricultural Products segment plants, processes and distributes green and organic agricultural produce as well as grows and cultivates yew trees.

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.

Shineco Inc has a Value Score of 100, which is considered to be undervalued.

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

You can read more about Shineco 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.

Teva Pharmaceutical Industries Ltd (ADR)’s Value Grade

Value Grade:

Teva Pharmaceutical Industries Ltd is a Israeli-based pharmaceutical company. The Company operates through three segments: North America, Europe and International Markets. Each business segment manages entire product portfolio in its region, including generics, specialty and over-the-counter (OTC) products. In addition to these three segments, The Company has other activities, primarily the sale of active pharmaceutical ingredients (API) to third parties, certain contract manufacturing services and an out-licensing platform offering a portfolio of products to other pharmaceutical companies through its affiliate Medis.

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.

Teva Pharmaceutical Industries Ltd (ADR) has a Value Score of 61, which is considered to be undervalued.

Teva Pharmaceutical Industries Ltd (ADR)’s price-to-book ratio is lower than its peers. This could make Teva Pharmaceutical Industries Ltd (ADR) more attractive for value investors when compared to the industry median at 1.82.

You can read more about Teva Pharmaceutical Industries Ltd (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.

cbdMD Inc’s Value Grade

Value Grade:

cbdMD, Inc. produces and distributes cannabidiol (CBD) products. The Company owns and operates CBD brands cbdMD, Paw CBD and cbdMD Botanicals. Its cbdMD brand of products includes a range of premium every day and functional CBD products, including tinctures; gummies; topicals; capsules; drink mixes; and sleep, focus and calming aids.Its Paw CBD brand of products includes a line of veterinarian-formulated products including tinctures, chews, topicals products in varying strengths and formulas. Its cbdMD Botanicals brand of beauty and skincare products features facial oil and serum, toners, moisturizers, clear skin, facial masks, exfoliants and body care stock-keeping units (SKU). cbdMD, Paw CBD and cbdMD Botanicals products are distributed through its e-commerce websites, third party ecommerce sites, select distributors and marketing partners as well as a variety of brick-and-mortar retailers. Its products are sold through www.cbdmd.com, www.pawcbd.com, and cbdmdbotanicals.com Websites.

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.

cbdMD Inc has a Value Score of 100, which is considered to be undervalued.

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

You can read more about cbdMD 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.

• Biofrontera Inc stock has a Value Grade of B.
• Bon Natural Life Ltd stock has a Value Grade of A.
• Endexx Corp stock has a Value Grade of B.
• Eagle Pharmaceuticals Inc stock has a Value Grade of A.
• Shineco Inc stock has a Value Grade of A.
• Teva Pharmaceutical Industries Ltd (ADR) stock has a Value Grade of B.
• cbdMD 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 Friday, February 09
• 7 Undervalued Pharmaceuticals Stocks for Thursday, February 08
• What You Need to Know About Prestige Consumer Healthcare Inc's Q3 Earnings
• Why AstraZeneca plc (ADR)’s (AZN) Stock Is Down 4.55%

AAII Disclaimer

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