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.

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 Tuesday, April 16, 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.

Aadi Bioscience Inc’s Value Grade

Value Grade:

Aadi Bioscience, Inc. is a commercial-stage biopharmaceutical company. The Company is focused on developing and commercializing precision therapies for cancers with alterations in the mammalian target of rapamycin (mTOR) pathway, a regulator of cell growth and cancer progression. Its lead drug product, FYARRO, is an mTOR inhibitor indicated for the treatment of adult patients with locally advanced unresectable or metastatic malignant perivascular epithelioid cell tumor (PEComa). FYARRO is a form of sirolimus bound to albumin. Sirolimus is a potent inhibitor of the mTOR biological pathway and inhibits downstream signaling from mTOR, which can promote tumor growth. FYARRO is composed of nanoparticles of sirolimus bound to human albumin with an average size less than 100 nanometers. It has also initiated a tumor-agnostic Phase II study (PRECISION 1) of FYARRO in patients with Tuberous Sclerosis Complex 1 and 2 (TSC1 and TSC2) alterations.

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.

Aadi Bioscience Inc has a Value Score of 82, which is considered to be undervalued.

When you look at Aadi Bioscience Inc’s price-to-sales ratio at 2.10 compared to the industry median at 2.49, this company has a lower price relative to revenue compared to its peers. This could make Aadi Bioscience Inc’s stock more attractive for value investors.

Now, let’s assess Aadi Bioscience Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 0.1, when compared to the industry median of 10.4, 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. Aadi Bioscience Inc’s shareholder yield is higher than its industry median ratio of (3.21%). 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. Aadi Bioscience Inc’s price-to-book ratio is lower than its industry median ratio of 1.94. This could make Aadi Bioscience Inc more attractive to investors looking for a new addition to their portfolio.

Amylyx Pharmaceuticals Inc’s Value Grade

Value Grade:

Amylyx Pharmaceuticals, Inc. is a commercial-stage biopharmaceutical company. The Company is engaged in the discovery and development of treatments for neurodegenerative diseases. The Company is focused on the development and commercialization of its product candidate, AMX0035 (sodium phenylbutyrate and taurursodiol, also known as ursodoxicoltaurine) for the treatment of amyotrophic lateral sclerosis (ALS). RELYVRIO (also known as AMX0035), an oral, fixed-dose combination of sodium phenylbutyrate and taurursodiol is approved to treat ALS in adults in the United States. AMX0035 is a dual unfolded protein response (UPR)-Bax apoptosis inhibitor composed of PB and TURSO (also known as TUDCA). Its development of antisense oligonucleotides (ASOs), including lead ASO AMX0114, which targets calpain-2 (CAPN2), a gene encoding calcium-dependent proteolytic enzyme which has been implicated in the pathogenesis of ALS and other neurodegenerative diseases.

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.

Amylyx Pharmaceuticals Inc has a Value Score of 72, which is considered to be undervalued.

Amylyx Pharmaceuticals Inc’s price-earnings ratio is 2.9 compared to the industry median at 23.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Amylyx Pharmaceuticals Inc more attractive for value investors.

Amylyx Pharmaceuticals Inc’s price-to-book ratio is higher than its peers. This could make Amylyx Pharmaceuticals Inc less attractive for value investors when compared to the industry median at 1.94.

You can read more about Amylyx 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.

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. Its second prescription drug licensed product in its portfolio is Xepi, which is a topical non-fluorinated quinolone that inhibits bacterial growth and used for the treatment of impetigo due to Staphylococcus aureus or Streptococcus pyogenes.

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 77, which is considered to be undervalued.

Biofrontera Inc’s price-to-book ratio is higher than its peers. This could make Biofrontera Inc less attractive for value investors when compared to the industry median at 1.94.

You can read more about Biofrontera 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.

CASI Pharmaceuticals Inc’s Value Grade

Value Grade:

CASI Pharmaceuticals, Inc. is a biopharmaceutical company. The Company is focused on developing and commercializing therapeutics and pharmaceutical products in China, the United States, and throughout the world. The Company is focused on acquiring, developing, and commercializing products that augment its hematology oncology therapeutic focus as well as other areas of unmet medical need. Its commercial product, EVOMELA, is an intravenous formulation of melphalan commercialized by Acrotech in the multiple myeloma treatment setting in the United States. Its pipeline products include CNCT19 (CD19 CAR-T), BI-1206 (anti- FcYRIIB antibody), CB-5339 (VCP/p97 inhibitor), CID-103 (Anti-CD38 Mab), Thiotepa, and Octreotide LAI. The Company?s Food and Drug Administration (FDA)-approved generic products for the China market include Entecavir tablets, Tenofovir disoproxil fumarate (TDF) tablets, Cilostazol tablets-50mg, Cilostazol tablets-100mg, Ondansetron HCL tablets, and Tizanidine tablets.

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.

CASI Pharmaceuticals Inc has a Value Score of 69, which is considered to be undervalued.

CASI Pharmaceuticals Inc’s price-to-book ratio is higher than its peers. This could make CASI Pharmaceuticals Inc less attractive for value investors when compared to the industry median at 1.94.

You can read more about CASI 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.

CYANOTECH CORP’s Value Grade

Value Grade:

Cyanotech Corporation is an agricultural company. It is engaged in the production of natural products derived from microalgae grown in complex and intricate agricultural systems on the Kona coast of Hawaii. It cultivates, on a large-scale basis, two microalgal species from which its two major product lines, natural astaxanthin products and spirulina products, are derived. Its products include BioAstin Hawaiian Astaxanthin and Hawaiian Spirulina Pacifica. BioAstin Hawaiian Astaxanthin is a dietary antioxidant shown to support and maintain the body’s natural inflammatory response, to enhance skin, and to support eye, joint and immune health. BioAstin Hawaiian Astaxanthin has expanding applications as a human dietary supplement and dietary ingredient. Hawaiian Spirulina Pacifica is a nutrient-rich dietary supplement used for extra energy, a strengthened immune system, cardiovascular benefits and as a source of antioxidant carotenoids. Its products are sold as consumer-packaged goods.

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.

CYANOTECH CORP has a Value Score of 89, which is considered to be undervalued.

CYANOTECH CORP’s price-to-book ratio is higher than its peers. This could make CYANOTECH CORP less attractive for value investors when compared to the industry median at 1.94.

You can read more about CYANOTECH 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.

Pharmacyte Biotech Inc’s Value Grade

Value Grade:

PharmaCyte Biotech, Inc. is a biotechnology company. It is focused on developing cellular therapies for cancer, diabetes, and malignant ascites based upon a cellulose-based live cell encapsulation technology known as Cell-in-a-Box. Its product candidate is referred to as CypCaps. The Cell-in-a-Box encapsulation technology potentially enables genetically engineered live human cells to be used to produce various biologically active molecules. It is advancing clinical research and development of new cellular-based therapies in oncology and diabetes. It is also focused on developing therapies for pancreatic and other solid cancerous tumors by using genetically engineered live human cells. Its product candidate for the treatment of diabetes consists of encapsulated genetically modified insulin-producing cells. It is also focused on the benefits of the Cell-in-a-Box technology to develop therapies for cancer that involve prodrugs based upon certain constituents of the Cannabis plant.

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.

Pharmacyte Biotech Inc has a Value Score of 99, which is considered to be undervalued.

Pharmacyte Biotech Inc’s price-to-book ratio is higher than its peers. This could make Pharmacyte Biotech Inc less attractive for value investors when compared to the industry median at 1.94.

You can read more about Pharmacyte 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.

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.

• Aadi Bioscience Inc stock has a Value Grade of A.
• Amylyx Pharmaceuticals Inc stock has a Value Grade of B.
• Biofrontera Inc stock has a Value Grade of B.
• CASI Pharmaceuticals Inc stock has a Value Grade of B.
• CYANOTECH CORP stock has a Value Grade of A.
• Pharmacyte Biotech 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 Tuesday, April 16
• 5 Undervalued Pharmaceuticals Stocks for Monday, April 15
• Why Avadel Pharmaceuticals PLC (ADR)’s (AVDL) Stock Is Up 6.32%
• Why Hims & Hers Health Inc’s (HIMS) Stock Is Down 5.30%

AAII Disclaimer

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