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 Thursday, May 30, 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.

Aytu Biopharma Inc’s Value Grade

Value Grade:

Aytu BioPharma, Inc. is a pharmaceutical company commercializing a portfolio of commercial prescription therapeutics and consumer health products. The Company’s Rx segment consists of prescription pharmaceutical products and the Consumer Health segment consists of various consumer healthcare products (the Consumer Health Portfolio). The Company’s prescription products include Adzenys XR-ODT (amphetamine) extended-release orally disintegrating tablets and Cotempla XR-ODT (methylphenidate) extended-release orally disintegrating tablets for the treatment of attention deficit hyperactivity disorder (ADHD); Karbinal ER (carbinoxamine maleate), an extended-release antihistamine suspension indicated to treat numerous allergic conditions; and Poly-Vi-Flor and Tri-Vi-Flor, two complementary fluoride-based prescription vitamin product lines available in various formulations for infants and children with fluoride deficiency. Its Consumer Health Segment addresses a range of common conditions.

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.

Aytu Biopharma Inc has a Value Score of 93, which is considered to be undervalued.

When you look at Aytu Biopharma Inc’s price-to-sales ratio at 0.18 compared to the industry median at 2.36, this company has a lower price relative to revenue compared to its peers. This could make Aytu Biopharma Inc’s stock more attractive for value investors.

Now, let’s assess Aytu Biopharma Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 1.3, when compared to the industry median of 11.0, 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. Aytu Biopharma Inc’s shareholder yield is lower than its industry median ratio of (3.51%). 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. Aytu Biopharma Inc’s price-to-book ratio is lower than its industry median ratio of 2.37. This could make Aytu Biopharma Inc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Aytu Biopharma Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Aytu Biopharma Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 19.56. This could make Aytu Biopharma Inc more attractive because the lower P/FCF ratio indicates that Aytu Biopharma Inc is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Procyon Corp’s Value Grade

Value Grade:

Procyon Corporation operates through its subsidiaries AMERX Health Care Corporation (AMERX) and Sirius Medical Supply, Inc. (Sirius). AMERX develops and markets proprietary medical products used in the treatment of pressure ulcers, stasis ulcers, wounds, dermatitis, inflammation and other skin problems. Its product lines include AMERX, AMERIGEL, HELIX3 Bioactive Collagen, EXTREMIT-EASE Compression Garment and Advantagen Surgical Collagen. AMERX markets a line of AMERIGEL advanced skin and wound care products made with Oakin, that promote healing in wound and problematic skin conditions, including AMERIGEL Hydrogel Wound Dressing, AMERIGEL Post Op Surgical Kits, AMERIGEL Saline Wound Wash, AMERIGEL Care Lotion, and AMERIGEL Barrier Lotion. HELIX3 is available in Collagen Powder and Collagen Matrix. Its wound care product includes AMERX Calcium Alginate Dressing, AMERX Foam Dressing, AMERX Gauze Dressing, AMERX Hyrdocolloid Dressing, and AMERX Wound Care Kits.

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.

Procyon Corp has a Value Score of 87, which is considered to be undervalued.

Procyon Corp’s price-to-book ratio is higher than its peers. This could make Procyon Corp less attractive for value investors when compared to the industry median at 2.37.

You can read more about Procyon 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.

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 89, 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 2.37.

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.

Scorpius Holdings Inc’s Value Grade

Value Grade:

Scorpius Holdings, Inc., formerly NightHawk Biosciences, Inc., is an integrated contract development and manufacturing company. The Company is focused on advancing biologic and cell therapy programs to the clinic and beyond. It offers a broad array of analytical testing, process development, and manufacturing services to pharmaceutical and biotech companies at its facilities in San Antonio, Texas. Its analytical services include development of a comprehensive range of analytical test methods to characterize complex biologics, including cell therapy-based products, protein therapeutics, vaccines and advanced therapies. Its Clinical Biomanufacturing includes cGMP Mammalian Cell Culture, and cGMP Microbial Fermentation. Its San Antonio facility is focused on the commercial-scale manufacturing of biodefense-focused molecules and biologics therapeutics. Its biomanufacturing services focus on accelerating product development timelines from pre-clinical evaluation to first-in-human studies.

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.

Scorpius Holdings Inc has a Value Score of 70, which is considered to be undervalued.

Scorpius Holdings Inc’s price-to-book ratio is higher than its peers. This could make Scorpius Holdings Inc less attractive for value investors when compared to the industry median at 2.37.

You can read more about Scorpius 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.

SCYNEXIS Inc’s Value Grade

Value Grade:

SCYNEXIS, Inc. is a biotechnology company. It is pioneering medicine to overcome and prevent difficult-to-treat and drug-resistant infections. It develops antifungal platform fungerps, a novel class of antifungal agents called triterpenoids, that are structurally distinct glucan synthase inhibitors and have generally shown in vitro and in vivo activity against a range of human fungal pathogens, such as Candida and Aspergillus genera, including multidrug-resistant strains, and Pneumocystis, Coccidioides, Histoplasma and Blastomyces genera and common mucorales species. Ibrexafungerp is the first representative of this novel class of antifungals with additional assets from the fungerp family, including SCY-247, in preclinical stages of development. The United States Food and Drug Administration approved BREXAFEMME for treatment of patients with vulvovaginal candidiasis, also known as vaginal yeast infection, and for the reduction in the incidence of recurrent vulvovaginal candidiasis.

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 93, which is considered to be undervalued.

SCYNEXIS Inc’s price-earnings ratio is 1.1 compared to the industry median at 22.5. 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 2.37.

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.

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 68, 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 2.37.

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.

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.

• Aytu Biopharma Inc stock has a Value Grade of A.
• Procyon Corp stock has a Value Grade of A.
• Sunshine Biopharma Inc stock has a Value Grade of A.
• Scorpius Holdings Inc stock has a Value Grade of B.
• SCYNEXIS Inc stock has a Value Grade of A.
• Sonoma Pharmaceuticals Inc stock has a Value Grade of B.

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 Thursday, May 30
• 3 Undervalued Pharmaceuticals Stocks for Wednesday, May 29
• Why Catalyst Pharmaceuticals Inc’s (CPRX) Stock Is Down 4.16%
• Why Grifols SA - ADR’s (GRFS) Stock Is Down 5.98%

AAII Disclaimer

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