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.

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 Wednesday, August 21, 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.

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 for the treatment of Wolfram syndrome and for the treatment of progressive supranuclear palsy, and AMX0114, the Company’s antisense oligonucleotide targeting calpain-2 for the treatment of amyotrophic lateral sclerosis (ALS). AMX0035 is a dual-unfolded protein response (UPR)-Bax apoptosis inhibitor composed of PB and TURSO (also known as TUDCA). The Company’s Avexitide is an investigational, first-in-class glucagon-like peptide-1 (GLP-1) receptor antagonist that has been evaluated in five clinical trials for post-bariatric hypoglycemia (PBH) and has also been studied in congenital hyperinsulinism (HI), two indications characterized by hyperinsulinemic hypoglycemia.

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 82, which is considered to be undervalued.

When you look at Amylyx Pharmaceuticals Inc’s price-to-sales ratio at 0.51 compared to the industry median at 2.95, this company has a lower price relative to revenue compared to its peers. This could make Amylyx Pharmaceuticals 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. Amylyx Pharmaceuticals Inc’s shareholder yield is higher than its industry median ratio of (2.97%). 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. Amylyx Pharmaceuticals Inc’s price-to-book ratio is lower than its industry median ratio of 2.59. This could make Amylyx Pharmaceuticals Inc more attractive to investors looking for a new addition to their portfolio.

Collegium Pharmaceutical Inc’s Value Grade

Value Grade:

Collegium Pharmaceutical, Inc. is a diversified specialty pharmaceutical company. The Company commercializes its pain portfolio, consisting of Xtampza extended-release (ER), Nucynta ER and Nucynta immediate-release (IR), Belbuca, and Symproic in the United States. Xtampza ER is an abuse-deterrent, extended-release, oral formulation of oxycodone. Xtampza ER is a pain treatment option designed with abuse deterrent properties and uses a technology platform, DETERx. The Nucynta Products are ER and IR oral formulations of tapentadol. Nucynta ER is indicated for the management of severe and persistent pain that requires an extended treatment period with a daily opioid analgesic. Nucynta IR is indicated for the management of acute pain severe enough to require an opioid analgesic. Belbuca is a buccal film that contains buprenorphine for severe and persistent pain. Symproic is used for the treatment of opioid-induced constipation (OIC) in adult patients with chronic non-cancer pain.

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.

Collegium Pharmaceutical Inc has a Value Score of 70, which is considered to be undervalued.

Collegium Pharmaceutical Inc’s price-earnings ratio is 16.4 compared to the industry median at 26.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Collegium Pharmaceutical Inc more attractive for value investors.

Collegium Pharmaceutical Inc’s price-to-book ratio is lower than its peers. This could make Collegium Pharmaceutical Inc more attractive for value investors when compared to the industry median at 2.59.

You can read more about Collegium Pharmaceutical 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.

Jazz Pharmaceuticals PLC’s Value Grade

Value Grade:

Jazz Pharmaceuticals PLC is a biotechnology company. The Company is engaged in developing medicines for people with serious diseases. The Company’s lead marketed products include Xywav (calcium, magnesium, potassium, and sodium oxybates) oral solution, Xyrem (sodium oxybate) oral solution, Epidiolex (cannabidiol) oral solution, Rylaze (asparaginase erwinia chrysanthemi (recombinant)-rywn), Zepzelca (lurbinectedin), Defitelio (defibrotide sodium) AND Vyxeos (daunorubicin and cytarabine) liposome for injection. The Xywav (calcium, magnesium, potassium, and sodium oxybates) oral solution product is for the treatment of cataplexy or excessive daytime sleepiness (EDS), in patients with narcolepsy seven years of age and older. The Xyrem (sodium oxybate) oral solution product is for the treatment of cataplexy or EDS in patients with narcolepsy seven years of age and older. The Defitelio (defibrotide sodium) product is for the treatment of hepatic veno-occlusive disease (VOD).

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.

Jazz Pharmaceuticals PLC has a Value Score of 61, which is considered to be undervalued.

Jazz Pharmaceuticals PLC’s price-earnings ratio is 19.7 compared to the industry median at 26.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Jazz Pharmaceuticals PLC more attractive for value investors.

Jazz Pharmaceuticals PLC’s price-to-book ratio is higher than its peers. This could make Jazz Pharmaceuticals PLC less attractive for value investors when compared to the industry median at 2.59.

You can read more about Jazz Pharmaceuticals PLC’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.

Natural Alternatives International, Inc.’s Value Grade

Value Grade:

Natural Alternatives International, Inc. is a formulator, manufacturer and marketer of nutritional supplements. The Company operates through two segments: Private-label contract manufacturing, and Royalty, licensing, and raw material. The Private-label contract manufacturing segment primarily provides manufacturing services to companies that market and distribute nutritional supplements and other health care products. Royalty, licensing, and raw material segment associated with the sale and license of beta-alanine under the Company’s CarnoSyn and SR CarnoSyn trademarks. The Company provides private-label contract manufacturing services to companies that market and distribute vitamins, minerals, herbal and other nutritional supplements as well as other health care products. It private-label contract manufacturing customers include companies that market nutritional supplements through direct sales marketing channels, direct to consumer e-commerce channels, and retail stores.

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.

Natural Alternatives International, Inc. has a Value Score of 79, which is considered to be undervalued.

Natural Alternatives International, Inc.’s price-to-book ratio is higher than its peers. This could make Natural Alternatives International, Inc. less attractive for value investors when compared to the industry median at 2.59.

You can read more about Natural Alternatives International, 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.

Pacira Biosciences Inc’s Value Grade

Value Grade:

Pacira BioSciences, Inc. is a holding company for Pacira Pharmaceuticals, Inc. The Company's non-opioid treatments include EXPAREL (bupivacaine liposome injectable suspension), which is a long-acting, local analgesic for postsurgical pain management; ZILRETTA (triamcinolone acetonide extended-release injectable suspension), which is an extended-release, intra-articular (IA), corticosteroid injection indicated for OA knee pain, and Iovera, which is a novel handheld device for delivering immediate, long-acting, drug-free pain control using precise, controlled doses of cold temperature to a targeted nerve. EXPAREL is used across multiple orthopedic procedures, including joint reconstruction, shoulder, spine, extremity procedures, and hip fractures. It is developing interventions to address debilitating conditions involving the sympathetic nervous system, such as cardiac electrical storm, chronic pain. Its clinical development programs include PCRX-201, and pMVL-Based Clinical Program.

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.

Pacira Biosciences Inc has a Value Score of 82, which is considered to be undervalued.

Pacira Biosciences Inc’s price-earnings ratio is 11.9 compared to the industry median at 26.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Pacira Biosciences Inc more attractive for value investors.

Pacira Biosciences Inc’s price-to-book ratio is higher than its peers. This could make Pacira Biosciences Inc less attractive for value investors when compared to the industry median at 2.59.

You can read more about Pacira Biosciences 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.

RedHill Biopharma Ltd (ADR)’s Value Grade

Value Grade:

RedHill Biopharma Ltd is an Israel-based specialty biopharmaceutical company primarily focused on gastrointestinal and infectious diseases. RedHill promotes the gastrointestinal drugs such as, Talicia for the treatment of Helicobacter pylori (H. pylori) infection, and Aemcolo, for the treatment of travelers’ diarrhea. RedHill’s clinical late-stage development programs include: :info: RHB-204, for pulmonary nontuberculous mycobacteria (NTM) disease; opaganib (ABC294640), host-directed, SPHK2 inhibitor targeting multiple indications, RHB-107 (upamostat), an oral, host-directed serine protease inhibitor with potential for pandemic preparedness, is in late-stage development for treatment of non-hospitalized symptomatic COVID-19, and is targeting multiple other cancer and inflammatory gastrointestinal diseases; RHB-104 for Crohn's disease; and RHB-102 for chemotherapy and radiotherapy induced nausea and vomiting.

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.

RedHill Biopharma Ltd (ADR) has a Value Score of 69, which is considered to be undervalued.

RedHill Biopharma Ltd (ADR)’s price-to-book ratio is higher than its peers. This could make RedHill Biopharma Ltd (ADR) less attractive for value investors when compared to the industry median at 2.59.

You can read more about RedHill Biopharma 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.

Silo Pharma Inc’s Value Grade

Value Grade:

Silo Pharma, Inc. is a developmental stage biopharmaceutical company. The Company is focused on developing novel therapeutics that address underserved conditions including stress-induced psychiatric disorders, chronic pain conditions, and central nervous system (CNS) diseases. It is engaged in acquiring and/or developing intellectual property or technology rights from universities and researchers to treat rare diseases, including the use of psychedelic drugs, such as psilocybin, and the potential benefits they may have in certain cases involving depression, mental health issues and neurological disorders. The Company’s lead program, SPC-15, is an intranasal treatment targeting PTSD and stress-induced anxiety disorders. Its SP-26 is a time-release ketamine-loaded implant for fibromyalgia and chronic pain relief. Its two preclinical programs are SPC-14, an intranasal compound for the treatment of Alzheimer’s disease, and SPU-16, a CNS-homing peptide targeting multiple sclerosis (MS).

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.

Silo Pharma Inc has a Value Score of 98, which is considered to be undervalued.

Silo Pharma Inc’s price-to-book ratio is higher than its peers. This could make Silo Pharma Inc less attractive for value investors when compared to the industry median at 2.59.

You can read more about Silo Pharma 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.

• Amylyx Pharmaceuticals Inc stock has a Value Grade of A.
• Collegium Pharmaceutical Inc stock has a Value Grade of B.
• Jazz Pharmaceuticals PLC stock has a Value Grade of B.
• Natural Alternatives International, Inc. stock has a Value Grade of B.
• Pacira Biosciences Inc stock has a Value Grade of A.
• RedHill Biopharma Ltd (ADR) stock has a Value Grade of B.
• Silo Pharma 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 Wednesday, August 21
• 6 Undervalued Pharmaceuticals Stocks for Tuesday, August 20
• Why Emergent Biosolutions Inc’s (EBS) Stock Is Down 20.33%
• Why SIGA Technologies Inc’s (SIGA) Stock Is Down 15.28%

AAII Disclaimer

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