Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 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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5 Undervalued Pharmaceuticals Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Pharmaceuticals industry for Monday, September 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. 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 66, which is considered to be undervalued.

When you look at Biofrontera Inc’s price-to-sales ratio at 0.16 compared to the industry median at 2.93, 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 (2.95%). 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 2.75. This could make Biofrontera Inc more attractive to investors looking for a new addition to their portfolio.

Immunoprecise Antibodies Ltd’s Value Grade

Value Grade:

ImmunoPrecise Antibodies Ltd. is a Canada-based biotherapeutic research and technology company. It leverages systems biology, multiomics modelling and artificial intelligence systems to support its technologies in bioplatform-based antibody discovery. Its services include highly specialized, full-continuum therapeutic biologics discovery, development, and out-licensing to support its business partners to discover and develop novel biologics. It utilizes custom antigen modeling, target analysis using Natural Language Processing and the HYFTTM analysis to lay the groundwork for the subsequent experimental phases. It offers services, such as immunogen design and manufacturing, B cell sorting incorporating its function-first B cell screening and sequencing, and the production and screening of custom, immune, and naive phage display libraries. It also operates LSA instrument platform, which is a provider of high-throughput large and small molecule screening and characterization solutions.

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.

Immunoprecise Antibodies Ltd has a Value Score of 61, which is considered to be undervalued.

Immunoprecise Antibodies Ltd’s price-to-book ratio is higher than its peers. This could make Immunoprecise Antibodies Ltd less attractive for value investors when compared to the industry median at 2.75.

You can read more about Immunoprecise Antibodies 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.

Procaps Group SA’s Value Grade

Value Grade:

Procaps Group SA is a Luxembourg-based healthcare and pharmaceutical company. The Company develops, manufactures and sells prescription drugs and products that are differentiated by their combinations and pharmaceutical forms, as well as nutritional supplements which include omega 3 fish oils and high-potency clinical compounds. It operates its business through 5 units which are Diabetrics, Farma Procaps, Softi Gel, Vital Care, and Clinical Specialties. Diabetrics provides diabetes solutions. Farma procaps formulates, manufactures and markets branded prescription drugs in Latin America. Softi Gel provides contract drug development and manufacturing services to third party pharmaceutical companies. Vital Care develops, manufactures and markets consumer healthcare products. Clinical Specialties develops, manufactures and markets complex drugs.

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.

Procaps Group SA has a Value Score of 63, which is considered to be undervalued.

Procaps Group SA’s price-earnings ratio is 3.7 compared to the industry median at 27.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Procaps Group SA more attractive for value investors.

Procaps Group SA’s price-to-book ratio is lower than its peers. This could make Procaps Group SA more attractive for value investors when compared to the industry median at 2.75.

You can read more about Procaps Group SA’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 79, 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 2.75.

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.

Universe Pharmaceuticals Inc’s Value Grade

Value Grade:

Universe Pharmaceuticals Inc is a China-based holding company mainly engaged in the manufacturing, marketing, sales and distribution of traditional Chinese medicine derivatives (TCMD) products targeting the elderly. Through its subsidiary, the Company sells TCMD products, biomedical drugs, medical instruments, Traditional Chinese Medicine Pieces (TCMPs), and dietary supplements manufactured by third-party pharmaceutical companies. Its TCMD products fall into two categories: chronic condition treatments as well as cold and flu medications, including Guben Yanling Pill, Shenrong Weisheng Pill, Fengshitong Medicinal Liquor, Isatis Root Granule and Qiangli Pipa Syrup. Its major customers are pharmaceutical companies, hospitals, clinics and drugstore chains. The Company mainly conducts its businesses within the Chinese market.

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.

Universe Pharmaceuticals Inc has a Value Score of 82, which is considered to be undervalued.

Universe Pharmaceuticals Inc’s price-to-book ratio is higher than its peers. This could make Universe Pharmaceuticals Inc less attractive for value investors when compared to the industry median at 2.75.

You can read more about Universe 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 5 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.
• Immunoprecise Antibodies Ltd stock has a Value Grade of B.
• Procaps Group SA stock has a Value Grade of B.
• Scorpius Holdings Inc stock has a Value Grade of B.
• Universe Pharmaceuticals Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 5 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.

• 5 Undervalued Pharmaceuticals Stocks for Monday, September 09
• 4 Undervalued Pharmaceuticals Stocks for Friday, September 06
• Why Apellis Pharmaceuticals Inc’s (APLS) Stock Is Up 4.48%
• Why Grifols SA - ADR’s (GRFS) Stock Is Down 4.39%

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.