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 Monday, April 17, 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.

Acasti Pharma Inc’s Value Grade

Value Grade:

Acasti Pharma Inc. is a late-stage specialty pharma company with drug delivery capability and technologies addressing rare and orphan diseases. The Company is targeting three underserved orphan diseases: Subarachnoid Hemorrhage (SAH), Ataxia Telangiectasia (A-T), and Postherpetic Neuralgia (PHN). The Company's lead product candidate includes GTX-104, which is a clinical-stage nanoparticle formulation of nimodipine being developed for IV infusion in SAH patients. The Company's other pipeline products include GTX-102, an oral mucosal spray formulation of betamethasone intended to develop neurological symptoms of A-T, including developing clinical assessments of posture and gait disturbance, and kinetic speech and oculomotor functions. GTX-101 is a topical bio-adhesive film-forming spray of bupivacaine for the treatment of PHN.

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.

Acasti Pharma Inc has a Value Score of 95, which is considered to be undervalued.

Now, let’s assess Acasti Pharma Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 0.2, when compared to the industry median of 9.6, 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. Acasti Pharma Inc’s shareholder yield is higher than its industry median ratio of (3.66%). 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. Acasti Pharma Inc’s price-to-book ratio is lower than its industry median ratio of 1.67. This could make Acasti Pharma Inc more attractive to investors looking for a new addition to their portfolio.

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 83, 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 1.67.

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.

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 Products, Belbuca, and Symproic in the United States. Xtampza ER is an abuse-deterrent, extended-release, oral formulation of oxycodone. Xtampza ER is for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment. The Nucynta Products are extended-release (ER) and immediate-release (IR) formulations of tapentadol. Nucynta ER is indicated for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment. Nucynta IR is indicated for the management of acute pain severe enough to require an opioid analgesic and for which alternative treatments are inadequate in adults. Belbuca is a buccal film that contains buprenorphine, a partial opioid agonist. Symproic is an oral formulation of naldemedine.

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 61, which is considered to be undervalued.

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 1.67.

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.

China Pharma Holdings Inc’s Value Grade

Value Grade:

China Pharma Holdings Inc is a company principally engaged in the development, manufacture and marketing of pharmaceutical products. The Company's products are for human use in connection, and with a variety of high-incidence and high-mortality diseases and medical conditions prevalent. The Company manufactures pharmaceutical products in the form of dry powder injectables, liquid injectables, tablets, capsules, and cephalosporin oral solutions. In addition, the Company is also engaged in the production of comprehensive healthcare products and protective 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.

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

China Pharma Holdings Inc’s price-to-book ratio is higher than its peers. This could make China Pharma Holdings Inc less attractive for value investors when compared to the industry median at 1.67.

You can read more about China Pharma 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.

Mallinckrodt PLC’s Value Grade

Value Grade:

Mallinckrodt plc develops, manufactures, markets and distributes branded and generic specialty pharmaceutical products and therapies. The Company focuses on various therapeutic areas, such as autoimmune and rare disease specialty areas, including neurology, rheumatology, nephrology, ophthalmology and pulmonology; immunotherapy and neonatal critical care respiratory therapies; analgesics and hemostasis products, and central nervous system drugs. Its segments include Specialty Brands and Specialty Generics. The Specialty Brands segment produces and markets branded pharmaceutical products and therapies. The Specialty Generics segment produces and markets specialty generic pharmaceuticals and active pharmaceutical ingredients (API) consisting of biologics, medicinal opioids, synthetic controlled substances, acetaminophen and other active ingredients. Its products include Acthar Gel, INOmax, Ofirmev, Therakos and Amitiza.

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.

Mallinckrodt PLC has a Value Score of 99, which is considered to be undervalued.

Mallinckrodt PLC’s price-to-book ratio is higher than its peers. This could make Mallinckrodt PLC less attractive for value investors when compared to the industry median at 1.67.

You can read more about Mallinckrodt 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.

Reunion Neuroscience Inc’s Value Grade

Value Grade:

Reunion Neuroscience Inc. is engaged in the psychedelic drug development company that provides therapeutic solutions for mental health conditions by developing serotonin receptor agonist compounds. The Company is developing the advancement of synthetic molecules targeting serotonin 5HT2A receptors. The Company’s products include RE104 and RE200. The Company’s lead asset, RE-104, which is a psychedelic drug being developed for post-partum and treatment resistant depression as a potential fast-acting antidepressant with durable efficacy. The RE104 as a potentially fast-acting treatment for the key indications of postpartum and treatment resistant depression. The Company is developing the RE200 series, which includes compounds with potential for more selective serotonin receptor activity with reduced psych activity for potential use in more chronic treatment paradigms and indications. The Company is focused on the research and development of its RE200 molecule group.

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.

Reunion Neuroscience Inc has a Value Score of 74, which is considered to be undervalued.

Reunion Neuroscience Inc’s price-to-book ratio is higher than its peers. This could make Reunion Neuroscience Inc less attractive for value investors when compared to the industry median at 1.67.

You can read more about Reunion Neuroscience 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.

Medicine Man Technologies Inc’s Value Grade

Value Grade:

Medicine Man Technologies, Inc. is a vertically integrated multi-state cannabis operator. The Company?s business involves the cultivation, manufacturing, distribution and retail sale of cannabis and cannabis-related products. The Company sells products it manufactures and cultivates and a variety of other cannabis goods through wholly owned retail stores, licensing arrangements, and/or third-party operators and retailers. The Company has three segments: Retail, Wholesale and Other. Retail segment consists of retail locations for the sale of cannabis products. The segment includes its Retail dispensaries located in Colorado and New Mexico. Wholesale segment consists of manufacturing, cultivation and sale of both wholesale cannabis and non-cannabis products. Other segment includes general corporate and other. The Company has operations in Colorado and New Mexico. It owns and operates 42 retail dispensaries, five cultivation facilities, and two manufacturing facilities.

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.

Medicine Man Technologies Inc has a Value Score of 77, which is considered to be undervalued.

Medicine Man Technologies Inc’s price-to-book ratio is higher than its peers. This could make Medicine Man Technologies Inc less attractive for value investors when compared to the industry median at 1.67.

You can read more about Medicine Man Technologies 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.

• Acasti Pharma Inc stock has a Value Grade of A.
• CASI Pharmaceuticals Inc stock has a Value Grade of A.
• Collegium Pharmaceutical Inc stock has a Value Grade of B.
• China Pharma Holdings Inc stock has a Value Grade of B.
• Mallinckrodt PLC stock has a Value Grade of A.
• Reunion Neuroscience Inc stock has a Value Grade of B.
• Medicine Man Technologies Inc 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 Monday, April 17
• Is PLx Pharma Inc (PLXPQ) Stock a Good Investment?
• Which Is a Better Investment, Amphastar Pharmaceuticals Inc or Bausch Health Companies Inc Stock?
• Which Is a Better Investment, Amphastar Pharmaceuticals Inc or Corcept Therapeutics Incorporated Stock?

AAII Disclaimer

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