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, September 29, 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.

Phibro Animal Health Corp’s Value Grade

Value Grade:

Phibro Animal Health Corporation is a diversified animal health and mineral nutrition company. It develops, manufactures and markets a range of products for food and companion animals, including poultry, swine, beef and dairy cattle, aquaculture and dogs. It markets approximately 770 product lines in over 80 countries to approximately 4,000 customers. The Company has three segments. Animal Health segment develops, manufactures and markets about 270 product lines, including antibacterials, anticoccidials and related products; nutritional specialty products; and vaccines. Mineral Nutrition segment manufactures and markets approximately 420 formulations and concentrations of trace minerals, such as zinc, manganese, copper, iron and other compounds, with a focus on customers in North America. Performance Products segment manufactures and markets specialty ingredients for use in the personal care, industrial chemical and chemical catalyst industries, predominantly in 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.

Phibro Animal Health Corp has a Value Score of 68, which is considered to be undervalued.

When you look at Phibro Animal Health Corp’s price-to-sales ratio at 0.51 compared to the industry median at 2.60, this company has a lower price relative to revenue compared to its peers. This could make Phibro Animal Health Corp’s stock more attractive for value investors.

Phibro Animal Health Corp’s price-earnings ratio is 15.44 compared to the industry median at 18.85. This means it has a lower share price relative to earnings compared to its peers. This could make Phibro Animal Health Corp more attractive for value investors.

Now, let’s assess Phibro Animal Health Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 8.8, when compared to the industry median of 10.3, 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. Phibro Animal Health Corp’s shareholder yield is higher than its industry median ratio of (3.87%). 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. Phibro Animal Health Corp’s price-to-book ratio is higher than its industry median ratio of 1.77. This could make Phibro Animal Health Corp less attractive to investors looking for a new addition to their portfolio.

RVL Pharmaceuticals PLC’s Value Grade

Value Grade:

RVL Pharmaceuticals plc is a specialty pharmaceutical company. The Company is focused on the commercialization of UPNEEQ, or RVL-1201 (oxymetazoline hydrochloride ophthalmic solution), 0.1%, for the treatment of acquired blepharoptosis, or low-lying eyelid, in adults. It is focused on growing Upneeq with eye care and medical aesthetic professionals and providing a prescription experience for patients through its pharmacy. RVL Pharmacy dispenses Upneeq only. The Company is also developing Arbaclofen ER tablets for the alleviation of spasticity in multiple sclerosis patients. Its target patient population comprises adults with droopy or low-lying eyelids or acquired ptosis, the majority of whom are female. Its healthcare provider customers include optometrists, ophthalmologists, oculoplastic surgeons, facial plastic surgeons, dermatologists, and practitioners qualified to diagnose and treat acquired blepharoptosis in adults.

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.

RVL Pharmaceuticals PLC has a Value Score of 75, which is considered to be undervalued.

RVL Pharmaceuticals PLC’s price-to-book ratio is higher than its peers. This could make RVL Pharmaceuticals PLC less attractive for value investors when compared to the industry median at 1.77.

You can read more about RVL Pharmaceuticals 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.

Medicine Man Technologies Inc’s Value Grade

Value Grade:

Medicine Man Technologies, Inc., operating as Schwazze, 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. It 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 86, 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 1.77.

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.

Sio Gene Therapies Inc’s Value Grade

Value Grade:

Sio Gene Therapies Inc. was a clinical-stage company focused on developing gene therapies to radically transform the lives of patients with neurodegenerative diseases. The Company has not generated any revenue.

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.

Sio Gene Therapies Inc has a Value Score of 91, which is considered to be undervalued.

Sio Gene Therapies Inc’s price-to-book ratio is higher than its peers. This could make Sio Gene Therapies Inc less attractive for value investors when compared to the industry median at 1.77.

You can read more about Sio Gene Therapies 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.

TherapeuticsMD Inc’s Value Grade

Value Grade:

TherapeuticsMD, Inc. is a healthcare company. The Company is focused on developing and commercializing products exclusively for women. It is engaged in conducting business by out-licensing its products and collecting royalties, after granting a license to commercialize the Company's IMVEXXY, BIJUVA, and prescription prenatal vitamin products sold under the BocaGreenMD and vitaMedMD brands in the United States and its possessions and territories and assigning the Company?s exclusive license to commercialize ANNOVERA in the United States and its possessions and territories to Mayne Pharma. ANNOVERA is a one-year (13 cycles) ring-shaped contraceptive vaginal system (CVS)). ANNOVERA, which is made with a silicone elastomer, contains segesterone acetate, a 19-nor progesterone derivative also known as Nestorone (SA) and ethinyl estradiol (EE). Its menopause portfolio includes IMVEXXY and BIJUV. IMVEXXY (estradiol vaginal inserts) for the treatment of moderate-to-severe dyspareunia.

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.

TherapeuticsMD Inc has a Value Score of 65, which is considered to be undervalued.

TherapeuticsMD Inc’s price-to-book ratio is higher than its peers. This could make TherapeuticsMD Inc less attractive for value investors when compared to the industry median at 1.77.

You can read more about TherapeuticsMD 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.

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 78, 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 1.77.

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.

• Phibro Animal Health Corp stock has a Value Grade of B.
• RVL Pharmaceuticals PLC stock has a Value Grade of B.
• Medicine Man Technologies Inc stock has a Value Grade of A.
• Sio Gene Therapies Inc stock has a Value Grade of A.
• TherapeuticsMD Inc stock has a Value Grade of B.
• cbdMD Inc stock has a Value Grade of B.

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.

• Small-Cap Value Is the Best Choice for Equity Diversification
• 6 Undervalued Pharmaceuticals Stocks for Friday, September 29
• Which Is a Better Investment, AbbVie Inc or Roivant Sciences Ltd Stock?
• Which Is a Better Investment, Amgen, Inc. or Roivant Sciences Ltd 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.