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 Tuesday, April 04, 2023. 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.

Assertio Holdings Inc’s Value Grade

Value Grade:

Assertio Holdings, Inc. is a commercial pharmaceutical company offering differentiated products to patients utilizing a non-personal promotional model. The Company?s commercial portfolio of branded products focuses on three areas: neurology, rheumatology, and pain and inflammation. Its primary marketed products include INDOCIN (indomethacin) Suppositories, INDOCIN (indomethacin) Oral Suspension, Otrexup (methotrexate) injection for subcutaneous use, Sympazan (clobazam) oral film, SPRIX (ketorolac tromethamine) Nasal Spray, CAMBIA (diclofenac potassium for oral solution) and Zipso (diclofenac potassium) Liquid filled capsules. Its other commercially available products include OXAYDO (oxycodone HCI, USP) tablets for oral use. INDOCIN (indomethacin) Suppositories are nonsteroidal anti-inflammatory drug (NSAID), indicated for moderate to severe rheumatoid arthritis, including acute flares of chronic diseases, moderate to severe ankylosing spondylitis, acute gouty arthritis and others.

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.

Assertio Holdings Inc has a Value Score of 79, which is considered to be undervalued.

When you look at Assertio Holdings Inc’s price-to-sales ratio at 1.89 compared to the industry median at 3.29, this company has a lower price relative to revenue compared to its peers. This could make Assertio Holdings Inc’s stock more attractive for value investors.

Assertio Holdings Inc’s price-earnings ratio is 3.49 compared to the industry median at 20.24. This means it has a lower share price relative to earnings compared to its peers. This could make Assertio Holdings Inc more attractive for value investors.

Now, let’s assess Assertio Holdings Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 2.3, when compared to the industry median of 10.0, 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. Assertio Holdings Inc’s shareholder yield is lower than its industry median ratio of (3.89%). 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. Assertio Holdings Inc’s price-to-book ratio is lower than its industry median ratio of 1.64. This could make Assertio Holdings Inc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Assertio Holdings Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Assertio Holdings Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 18.41. This could make Assertio Holdings Inc more attractive because the lower P/FCF ratio indicates that Assertio Holdings 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.

Aytu Biopharma Inc’s Value Grade

Value Grade:

Aytu BioPharma, Inc. is a pharmaceutical company. The Company is focused on commercializing therapeutics and consumer health products and developing therapeutics for rare pediatric-onset or difficult-to-treat diseases. It manufactures its products for the treatment of attention deficit hyperactivity disorder (ADHD) at its manufacturing facilities and uses third party manufacturers for its other prescription and consumer health products. The Company operates through two business segments: BioPharma and Consumer Health. The BioPharma segment consists of prescription pharmaceutical products (the Rx Portfolio). The Consumer Health segment consists of various consumer healthcare products (the Consumer Health Portfolio). The Company also has two product candidates in development, AR101 (enzastaurin) for the treatment of vascular Ehlers-Danlos Syndrome (VEDS) and Healight (endotracheal ultraviolet light catheter) for the treatment of severe, difficult-to-treat respiratory 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.

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

Aytu Biopharma Inc’s price-to-book ratio is higher than its peers. This could make Aytu Biopharma Inc less attractive for value investors when compared to the industry median at 1.64.

You can read more about Aytu 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.

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. It is also focused on acquiring, developing, and commercializing products that augment its hematology-oncology therapeutic focus as well as other areas of unmet medical need. The Company’s operations in China are conducted primarily through its subsidiaries, which include CASI Pharmaceuticals (China) Co., Ltd. (CASI China), which is wholly owned and is located in Beijing, China, and CASI Pharmaceuticals (Wuxi) Co., Ltd. (CASI Wuxi), which is located in Wuxi, China. Its commercial product, EVOMELA, is developed for use as a conditioning treatment prior to stem cell transplantation and as a palliative treatment for patients with multiple myeloma. The Company’s other core hematology/oncology assets in its pipeline include CNCT19, BI-1206, CB-5339 and CID-103.

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 90, 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 1.64.

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.

Equillium Inc’s Value Grade

Value Grade:

Equillium, Inc. is a clinical-stage biotechnology company develops novel therapeutics to treat severe autoimmune and inflammatory, or immuno-inflammatory, disorders with high unmet medical need. The Company’s initial product candidate, itolizumab (EQ001), is a clinical-stage monoclonal antibody that selectively targets the novel immune checkpoint receptor CD6. The Company’s pipeline is focused on developing EQ001, EQ101 and EQ102 disease modifying treatments for multiple severe immuno-inflammatory disorders. Its clinical development programs for EQ001 for the treatment of acute graft-versus-host disease (aGVHD) and lupus/lupus nephritis. The Company is in the process of clinical development of EQ101 and EQ102 and to initiate a Phase II study of EQ101 in alopecia areata and a Phase I study of EQ102 in celiac disease. The Company is conducting the EQUATE study, is a Phase Ib clinical study of EQ001 therapy concomitant with steroids for the treatment of aGVHD.

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.

Equillium Inc has a Value Score of 67, which is considered to be undervalued.

Equillium Inc’s price-to-book ratio is higher than its peers. This could make Equillium Inc less attractive for value investors when compared to the industry median at 1.64.

You can read more about Equillium 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.

Organon & Co’s Value Grade

Value Grade:

Organon & Co. (Organon) is a global healthcare company. The Company is engaged in developing and delivering health solutions through a portfolio of prescription therapies and medical devices within women's health, biosimilars and established brands (Organon Products). Organon has a portfolio of contraception and fertility brands, such as Nexplanon or Implanon NXT, NuvaRing, Follistim AQ, and Elonva. The Company?s Biosimilars portfolio spans immunology and oncology treatments. It also has a portfolio of established brands, including brands in cardiovascular, respiratory, dermatology and non-opioid pain management. The Company sells these products through various channels, including drug wholesalers and retailers, hospitals, government agencies and managed healthcare providers, such as health maintenance organizations, pharmacy benefit managers and other institutions. It operates its manufacturing facilities in Belgium, Brazil, Indonesia, Mexico, the Netherlands and the United Kingdom.

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.

Organon & Co has a Value Score of 80, which is considered to be undervalued.

Organon & Co’s price-earnings ratio is 6.5 compared to the industry median at 20.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Organon & Co more attractive for value investors.

You can read more about Organon & Co’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.

PLx Pharma Inc’s Value Grade

Value Grade:

PLx Pharma Inc. is a commercial-stage drug delivery platform technology company, which is focused on its clinically validated and patent-protected PLxGuard technology. The Company has two commercialized products, VAZALORE 81 milligram (mg) and VAZALORE 325 mg, which are liquid-filled aspirin capsules for over the counter (OTC) distribution. The Company markets VAZALORE to the healthcare professional and the consumer through several sales and marketing channels. Its product pipeline also includes other oral NSAIDs using the PLxGuard drug delivery platform, including PL1200 Ibuprofen 200 mg and PL1100 Ibuprofen 400 mg, for pain and inflammation in Phase I clinical stage. PLxGuard drug delivery platform employs a pH-dependent release mechanism that relies on association of lipidic excipients with APIs for targeted release in the GI tract.

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.

PLx Pharma Inc has a Value Score of 71, which is considered to be undervalued.

PLx Pharma Inc’s price-to-book ratio is higher than its peers. This could make PLx Pharma Inc less attractive for value investors when compared to the industry median at 1.64.

You can read more about PLx 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.

Takeda Pharmaceutical Co Ltd (ADR)’s Value Grade

Value Grade:

Takeda Pharmaceutical Company Limited is a Japan-based company mainly engaged in the pharmaceutical business. The Company is engaged in the research, development, manufacture and sale of pharmaceutical products, General medical products, quasi drugs and healthcare products in Japan and overseas. The Company's research and development functions are concentrated in four areas of oncology (cancer), digestive system diseases, rare diseases and neurology (neuropsychiatric diseases), as well as two business units of plasma fractionation products and vaccines. The Company is engaged in the improvement of pipelines at research and development centers located mainly in Japan and the United States.

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.

Takeda Pharmaceutical Co Ltd (ADR) has a Value Score of 63, which is considered to be undervalued.

Takeda Pharmaceutical Co Ltd (ADR)’s price-earnings ratio is 24.9 compared to the industry median at 20.2. This means that it has a higher price relative to its earnings compared to its peers. This makes Takeda Pharmaceutical Co Ltd (ADR) less attractive for value investors.

Takeda Pharmaceutical Co Ltd (ADR)’s price-to-book ratio is higher than its peers. This could make Takeda Pharmaceutical Co Ltd (ADR) less attractive for value investors when compared to the industry median at 1.64.

You can read more about Takeda Pharmaceutical Co 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.

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.

• Assertio Holdings Inc stock has a Value Grade of B.
• Aytu Biopharma Inc stock has a Value Grade of A.
• CASI Pharmaceuticals Inc stock has a Value Grade of A.
• Equillium Inc stock has a Value Grade of B.
• Organon & Co stock has a Value Grade of B.
• PLx Pharma Inc stock has a Value Grade of B.
• Takeda Pharmaceutical Co Ltd (ADR) stock has a Value Grade of B.

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 Tuesday, April 04
• Which Is a Better Investment, Apellis Pharmaceuticals Inc or Revance Therapeutics Inc Stock?
• Which Is a Better Investment, Bausch Health Companies Inc or Roivant Sciences Ltd Stock?
• Which Is a Better Investment, Biogen Inc or Incyte Corporation Stock?

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.