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, May 31, 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.

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 77, which is considered to be undervalued.

When you look at Aytu Biopharma Inc’s price-to-sales ratio at 0.06 compared to the industry median at 2.70, this company has a lower price relative to revenue compared to its peers. This could make Aytu Biopharma 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. Aytu Biopharma Inc’s shareholder yield is lower than its industry median ratio of (2.67%). 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. Aytu Biopharma Inc’s price-to-book ratio is lower than its industry median ratio of 1.55. This could make Aytu Biopharma Inc more attractive to investors looking for a new addition to their portfolio.

Endo International PLC’s Value Grade

Value Grade:

Endo International plc is a specialty pharmaceutical company. The Company operates through four business segments: Branded Pharmaceuticals, Sterile Injectables, Generic Pharmaceuticals and International Pharmaceuticals. Its Branded Pharmaceuticals segment includes a variety of branded products in the areas of urology, orthopedics, endocrinology, medical aesthetics and bariatrics, among others. Its products include XIAFLEX, SUPPRELIN LA, NASCOBAL Nasal Spray, AVEED, QWO, PERCOCET, TESTOPEL, EDEX and LIDODERM, among others. Its Sterile Injectables segment consists of branded sterile injectable products such as VASOSTRICT, ADRENALIN and APLISOL, among others, and certain generic sterile injectable products, including ertapenem for injection and ephedrine sulfate injection, among others. Its Generic Pharmaceuticals segment consists of a product portfolio including solid oral extended-release, solid oral immediate-release, liquids, semi-solids, patches, powders, ophthalmics and sprays.

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.

Endo International PLC has a Value Score of 70, which is considered to be undervalued.

You can read more about Endo International 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.

LifeVantage Corp’s Value Grade

Value Grade:

LifeVantage Corporation is engaged in the business of identification, research, development, formulation and sale of advanced nutrigenomic activators, dietary supplements, nootropics, pre- and pro-biotics, weight management, skin and hair care, bath and body, and targeted relief products. The Company's dietary supplements include its flagship Protandim family of products, LifeVantage Omega+, ProBio, IC Bright, and Daily Wellness dietary supplements. The Protandim product line includes Protandim NRF1 Synergizer, Protandim Nrf2 Synergizer, and Protandim NAD Synergizer. TrueScience is its line of skin, bath and body, target relief, and hair care products; Petandim, its companion pet supplement formulated to combat oxidative stress in dogs; Axio, its nootropic energy drink mixes, and PhysIQ, its smart weight management system, which includes PhysIQ Fat Burn, PhysIQ Prebiotic and PhysIQ Whey Protein, all formulated to aid in weight management.

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.

LifeVantage Corp has a Value Score of 79, which is considered to be undervalued.

LifeVantage Corp’s price-to-book ratio is lower than its peers. This could make LifeVantage Corp more attractive for value investors when compared to the industry median at 1.55.

You can read more about LifeVantage Corp’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.

Sunshine Biopharma Inc’s Value Grade

Value Grade:

Sunshine Biopharma, Inc. is a Canada-based pharmaceutical company that is focused on the research, development and commercialization of oncology and antiviral drugs. The Company’s drug development operations include SBFM-PL4 Anti-Coronavirus Treatment and Adva-27a Anticancer Drug. The Company’s drug development activities are focused on the development of a small molecule called Adva-27a for the treatment of aggressive forms of cancer. A Topoisomerase II inhibitor, Adva-27a has been shown to be effective at destroying Multidrug Resistant Cancer cells, including pancreatic cancer cells, breast cancer cells, small-cell lung cancer cells and uterine sarcoma cells. The Company, through its subsidiary, Sunshine Biopharma Canada Inc. (Sunshine Canada), develops science-based nutritional supplements. Its product includes Essential 9 a nutritional supplement tablets, which is comprised of the nine essential amino acids for human body.

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.

Sunshine Biopharma Inc has a Value Score of 64, which is considered to be undervalued.

Sunshine Biopharma Inc’s price-to-book ratio is higher than its peers. This could make Sunshine Biopharma Inc less attractive for value investors when compared to the industry median at 1.55.

You can read more about Sunshine 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.

Canopy Growth Corp’s Value Grade

Value Grade:

Canopy Growth Corporation is a Canada-based company. The principal activities of the Company are the production, distribution and sale of a diverse range of cannabis and cannabinoid-based products for both adult recreational and medical purposes under a portfolio of distinct brands in Canada. The Company operates through five segments: Canada cannabis, Rest-of-world cannabis, Storz & Bickel, BioSteel and This Works. The Canada cannabis segment includes the production, distribution and sale of a diverse range of cannabis, hemp and cannabis products in Canada. The Rest-of-world cannabis segment includes the production, distribution and sale of a diverse range of cannabis, hemp and cannabis products internationally pursuant to applicable international legislation, regulations and permits. The Storz & Bickel segment includes the production, distribution and sale of vaporizers. The BioSteel segment includes the production, distribution and sale of consumer packaged goods (CPG).

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.

Canopy Growth Corp has a Value Score of 63, which is considered to be undervalued.

Canopy Growth Corp’s price-to-book ratio is higher than its peers. This could make Canopy Growth Corp less attractive for value investors when compared to the industry median at 1.55.

You can read more about Canopy Growth Corp’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.

• Aytu Biopharma Inc stock has a Value Grade of B.
• Endo International PLC stock has a Value Grade of B.
• LifeVantage Corp stock has a Value Grade of B.
• Sunshine Biopharma Inc stock has a Value Grade of B.
• Canopy Growth Corp 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, May 31
• 4 Undervalued Pharmaceuticals Stocks for Tuesday, May 30
• Why HUTCHMED (China) Ltd (ADR)’s (HCM) Stock Is Down 9.86%
• Why Kamada Ltd.’s (KMDA) Stock Is Down 6.13%

AAII Disclaimer

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