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.

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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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 Wednesday, April 26, 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 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. Acasti Pharma Inc’s shareholder yield is higher than its industry median ratio of (3.06%). 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 1.64. This could make Acasti Pharma Inc more attractive to investors looking for a new addition to their portfolio.

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 82, which is considered to be undervalued.

Assertio Holdings Inc’s price-earnings ratio is 3.1 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 Assertio Holdings Inc more attractive for value investors.

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

You can read more about Assertio 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.

Bayer AG (ADR)’s Value Grade

Value Grade:

Bayer AG is a German-based life science company. The Company's segments are Pharmaceuticala and Consumer Health. The Pharmaceuticals segment focuses on researching, developing and marketing prescription products and specialty therapeutics especially in the areas of cardiology, oncology, gynecology, hematology and ophthalmology, as well as radiopharmacology and others. The Company is focusing on their oncology platform for Targeted Alpha Therapies for treating prostate cancer. The Consumer Health segment develops, produces and markets nonprescription over-the-counter products in the dermatology, dietary supplement, analgesic, gastrointestinal, cold, allergy, sinus and flu, foot care and sun protection categories, among others. The Crop Science segment has been moved to Cinven which operates as an independent company called Envu.

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.

Bayer AG (ADR) has a Value Score of 70, which is considered to be undervalued.

Bayer AG (ADR)’s price-earnings ratio is 14.1 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 Bayer AG (ADR) more attractive for value investors.

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

You can read more about Bayer AG (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.

Elite Pharmaceuticals Inc’s Value Grade

Value Grade:

Elite Pharmaceuticals, Inc. is a specialty pharmaceutical company that develops niche generic products. The Company is engaged in developing and manufacturing oral, controlled-release drug products. The Company owns multiple generic products which have been licensed to Lannett Company, Prasco, LLC, Epic Pharma, LLC, and TAGI Pharma. The Company’s segments include Abbreviated New Drug Applications (ANDA) and New Drug Application (NDA). The Company’s products include Phentermine HCl 37.5 milligram tablets (mg), Phendimetrazine Tartrate 35mg tablets, Phentermine HCl 15mg and 30mg capsules, Dantrolene 25mg, Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate, Dextroamphetamine Saccharate, Amphetamine Aspartate, Amphetamine Sulfate Immediate Release 5mg, Trimipramine Maleate Immediate Release 25mg, 50mg and 100mg capsules, Oxycodone HCl Immediate Release 5mg, 10mg, 15mg, 20mg and 30mg tablets, Isradipine 2.5mg and 5mg capsules and Naltrexone HCl 50mg tablets.

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.

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

Elite Pharmaceuticals Inc’s price-earnings ratio is 4.9 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 Elite Pharmaceuticals Inc more attractive for value investors.

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

You can read more about Elite 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.

I-Mab ADR’s Value Grade

Value Grade:

I-Mab is a China-based company mainly engaged in the development of innovative global biotechnology. The Company's main businesses include engaging in track record in innovation, developing innovative drug candidates and conduct clinical validation of the assets and commercialization. The Company's pipeline is composed of ten clinical-stage assets and ten preclinical assets, among which seven assets have moved to Phase 2 or Phase 3 clinical trial stage. Its pipeline is expected to yield three near-term NDA filings and/or product launches, including felzartamab for multiple myeloma (MM), eftansomatropin alfa for pediatric growth hormone deficiency (PGHD), and potentially lemzoparlimab for myelodysplastic syndromes (MDS) and later for acute myeloid leukemia (AML) and non-Hodgkin's lymphoma (NHL).

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.

I-Mab ADR has a Value Score of 75, which is considered to be undervalued.

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

You can read more about I-Mab 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 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.

• Acasti Pharma Inc stock has a Value Grade of A.
• Assertio Holdings Inc stock has a Value Grade of A.
• Bayer AG (ADR) stock has a Value Grade of B.
• Elite Pharmaceuticals Inc stock has a Value Grade of A.
• I-Mab ADR stock has a Value Grade of B.

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 Wednesday, April 26
• Which Is a Better Investment, Apellis Pharmaceuticals Inc or Biogen Inc Stock?
• Which Is a Better Investment, Apellis Pharmaceuticals Inc or Biomarin Pharmaceutical Inc Stock?
• Which Is a Better Investment, Apellis Pharmaceuticals Inc or Incyte Corporation Stock?

AAII Disclaimer

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