Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 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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6 Undervalued Pharmaceuticals Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 6 undervalued stocks in the Pharmaceuticals industry for Friday, June 02, 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.

Emergent Biosolutions Inc’s Value Grade

Value Grade:

Emergent BioSolutions, Inc. is a life sciences company providing preparedness and response solutions addressing accidental, deliberate and naturally occurring public health threats (PHTs). Its segments include Products Segment and Services Segment. The Products Segment includes the government-medical countermeasures (MCM) business, which focuses on procurement of MCM products and procured product candidates by domestic and international government customers. It sells MCM products and procures product candidates to domestic and international non-government organizations and to governments outside of the United States. It also includes the commercial business, which focuses on sales of NARCAN (naloxone HCI) Nasal Spray and its travelers' vaccines. The Services Segment consists of contract development and manufacturing (CDMO) services, which includes development services (process and analytical development), drug substance manufacturing and drug product manufacturing (fill/finish).

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.

Emergent Biosolutions Inc has a Value Score of 95, which is considered to be undervalued.

When you look at Emergent Biosolutions Inc’s price-to-sales ratio at 0.42 compared to the industry median at 2.82, this company has a lower price relative to revenue compared to its peers. This could make Emergent Biosolutions 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. Emergent Biosolutions Inc’s shareholder yield is higher than its industry median ratio of (2.46%). 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. Emergent Biosolutions Inc’s price-to-book ratio is lower than its industry median ratio of 1.58. This could make Emergent Biosolutions Inc more attractive to investors looking for a new addition to their portfolio.

Hoth Therapeutics Inc’s Value Grade

Value Grade:

Hoth Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on developing therapies for unmet medical needs. The Company is also focused on developing a topical formulation for treating side effects from drugs used for the treatment of cancer; a treatment for mast-cell derived cancers and anaphylaxis; a treatment for traumatic brain injury and ischemic stroke, and a treatment and/or prevention for Alzheimer?s or other neuroinflammatory diseases. It also has assets being developed for atopic dermatitis; a treatment for asthma and allergies using inhalational administration, and a treatment for acne as well as inflammatory bowel diseases. It is also developing a diagnostic device via a mobile device. Its development products include HT-001, HT-KIT, HT-TBI and HT-ALZ. Its preclinical development products include HT-003, HT-004, and HT-002. It also has interests in certain other assets being developed by third parties, including a treatment for patients with lupus.

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.

Hoth Therapeutics Inc has a Value Score of 72, which is considered to be undervalued.

Hoth Therapeutics Inc’s price-to-book ratio is higher than its peers. This could make Hoth Therapeutics Inc less attractive for value investors when compared to the industry median at 1.58.

You can read more about Hoth Therapeutics 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.

Integrated BioPharma, Inc.’s Value Grade

Value Grade:

Integrated Biopharma Inc. is engaged primarily in manufacturing, distributing, marketing and sales of vitamins, nutritional supplements and herbal products. The Company’s business segments include Contract Manufacturing operated by Manhattan Drug Company, Inc. (MDC), which manufactures vitamins and nutritional supplements for sale to distributors, multilevel marketers and specialized health-care providers and Other Nutraceutical Businesses, which includes the operations of AgroLabs, Inc. (AgroLabs), which distributed healthful nutritional products for sale through major mass market, grocery and drug and vitamin retailers under brands: Peaceful Sleep, and Wheatgrass and other products introduced into the market using the AgroLabs name; The Vitamin Factory, IHT Health Products, Inc. (IHT), MDC Warehousing and Distribution, Inc., and Chem International, Inc. The Company’s customers are located in the United States and Luxembourg.

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.

Integrated BioPharma, Inc. has a Value Score of 89, which is considered to be undervalued.

Integrated BioPharma, Inc.’s price-earnings ratio is 7.5 compared to the industry median at 18.8. This means that it has a lower price relative to its earnings compared to its peers. This makes Integrated BioPharma, Inc. more attractive for value investors.

Integrated BioPharma, Inc.’s price-to-book ratio is higher than its peers. This could make Integrated BioPharma, Inc. less attractive for value investors when compared to the industry median at 1.58.

You can read more about Integrated 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.

Natural Alternatives International, Inc.’s Value Grade

Value Grade:

Natural Alternatives International, Inc. is a formulator, manufacturer, and marketer of nutritional supplements. The Company’s segments include private-label contract manufacturing, and patent and trademark licensing. Private-label contract manufacturing segment is engaged in the provision of private-label contract manufacturing services to companies that market and distribute vitamins, minerals, herbal, nutritional supplements, and other health care products. Patent and trademark licensing segment owns a patent estate related to the raw material ingredient known as beta-alanine, which is primarily commercialized through the direct sale of this raw material and supply agreements with third parties for the distribution and use of this raw material under its CarnoSyn and SR CarnoSyn trademarks. Its private-label contract manufacturing products are sold in the United States, Europe, Australia, Asia, Mexico, and Canada.

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.

Natural Alternatives International, Inc. has a Value Score of 91, which is considered to be undervalued.

Natural Alternatives International, Inc.’s price-earnings ratio is 12.7 compared to the industry median at 18.8. This means that it has a lower price relative to its earnings compared to its peers. This makes Natural Alternatives International, Inc. more attractive for value investors.

Natural Alternatives International, Inc.’s price-to-book ratio is higher than its peers. This could make Natural Alternatives International, Inc. less attractive for value investors when compared to the industry median at 1.58.

You can read more about Natural Alternatives International, 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.

Nektar Therapeutics’s Value Grade

Value Grade:

Nektar Therapeutics is a clinical-stage, research-based drug discovery biopharmaceutical company. The Company is focused on discovering and developing medicines in the field of immunotherapy. The Company has a research and development pipeline of investigational medicines in oncology and immunology. In oncology, it is focused on developing medicines based on targeting biological pathways that stimulate and sustain the body?s immune response to fight cancer. Its pipeline NKTR-255 is an investigational biologic that is designed to target the interleukin-15 (IL-15) pathway in order to activate the body?s innate and adaptive immunity. Its Rezpegaldesleukin (REZPEG) pipeline is an investigational, potential first-in-class T regulatory cell stimulator that addresses this underlying immune system imbalance in people with many autoimmune and inflammatory conditions. REZPEG is being developed as a self-administered injection for a number of autoimmune and inflammatory diseases.

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.

Nektar Therapeutics has a Value Score of 68, which is considered to be undervalued.

Nektar Therapeutics’s price-to-book ratio is higher than its peers. This could make Nektar Therapeutics less attractive for value investors when compared to the industry median at 1.58.

You can read more about Nektar Therapeutics’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.

cbdMD Inc’s Value Grade

Value Grade:

cbdMD, Inc. produces and distributes cannabidiol (CBD) products. The Company owns and operates CBD brands cbdMD, Paw CBD and cbdMD Botanicals. Its cbdMD brand of products includes a range of premium every day and functional CBD products, including tinctures; gummies; topicals; capsules; drink mixes; and sleep, focus and calming aids.Its Paw CBD brand of products includes a line of veterinarian-formulated products including tinctures, chews, topicals products in varying strengths and formulas. Its cbdMD Botanicals brand of beauty and skincare products features facial oil and serum, toners, moisturizers, clear skin, facial masks, exfoliants and body care stock-keeping units (SKU). cbdMD, Paw CBD and cbdMD Botanicals products are distributed through its e-commerce websites, third party ecommerce sites, select distributors and marketing partners as well as a variety of brick-and-mortar retailers. Its products are sold through www.cbdmd.com, www.pawcbd.com, and cbdmdbotanicals.com Websites.

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.

cbdMD Inc has a Value Score of 91, which is considered to be undervalued.

cbdMD Inc’s price-to-book ratio is higher than its peers. This could make cbdMD Inc less attractive for value investors when compared to the industry median at 1.58.

You can read more about cbdMD 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 6 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.

• Emergent Biosolutions Inc stock has a Value Grade of A.
• Hoth Therapeutics Inc stock has a Value Grade of B.
• Integrated BioPharma, Inc. stock has a Value Grade of A.
• Natural Alternatives International, Inc. stock has a Value Grade of A.
• Nektar Therapeutics stock has a Value Grade of B.
• cbdMD Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 6 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.

• 6 Undervalued Pharmaceuticals Stocks for Friday, June 02
• 4 Undervalued Pharmaceuticals Stocks for Thursday, June 01
• Why Calliditas Therapeutics AB - ADR’s (CALT) Stock Is Up 4.37%
• Why Elanco Animal Health Inc’s (ELAN) Stock Is Up 5.52%

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