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 Monday, November 13, 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.

Fortress Biotech Inc’s Value Grade

Value Grade:

Fortress Biotech, Inc. is a biopharmaceutical company that acquires, develops and commercializes pharmaceutical and biotechnology products and product candidates. The Company markets its various branded dermatology products, Qbrexza, Accutane, Amzeeq, Zilxi, Ximino, Exelderm and Targadox. Qbrexza (glycopyrronium 2.4%) is a medicated cloth towelette for the treatment of primary axillary hyperhidrosis in adults and children nine years and older. Accutane (isotretinoin) is an oral capsule for the treatment of severe recalcitrant nodular acne. Amzeeq (minocycline 4%) topical foam is a topical minocycline treatment for the inflammatory lesions of non-nodular moderate to severe acne vulgaris in adults and children nine years and older. Zilxi (minocycline 1.5%) is a topical foam and a topical minocycline treatment for inflammatory lesions of rosacea in adults. Ximino (minocycline hydrochloride) is an oral minocycline drug for the treatment of moderate to severe acne.

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.

Fortress Biotech Inc has a Value Score of 73, which is considered to be undervalued.

When you look at Fortress Biotech Inc’s price-to-sales ratio at 0.15 compared to the industry median at 2.28, this company has a lower price relative to revenue compared to its peers. This could make Fortress Biotech 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. Fortress Biotech Inc’s shareholder yield is lower than its industry median ratio of (2.96%). 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. Fortress Biotech Inc’s price-to-book ratio is lower than its industry median ratio of 1.59. This could make Fortress Biotech Inc more attractive to investors looking for a new addition to their portfolio.

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 81, 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 1.59.

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.

RedHill Biopharma Ltd (ADR)’s Value Grade

Value Grade:

RedHill Biopharma Ltd is an Israel-based specialty biopharmaceutical company primarily focused on gastrointestinal and infectious diseases. RedHill promotes the gastrointestinal drugs such as, Talicia for the treatment of Helicobacter pylori (H. pylori) infection, and Aemcolo, for the treatment of travelers? diarrhea. RedHill?s clinical late-stage development programs include: :info: RHB-204, for pulmonary nontuberculous mycobacteria (NTM) disease; opaganib (ABC294640), host-directed, SPHK2 inhibitor targeting multiple indications, RHB-107 (upamostat), an oral, host-directed serine protease inhibitor with potential for pandemic preparedness, is in late-stage development for treatment of non-hospitalized symptomatic COVID-19, and is targeting multiple other cancer and inflammatory gastrointestinal diseases; RHB-104 for Crohn's disease; and RHB-102 for chemotherapy and radiotherapy induced nausea and vomiting.

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.

RedHill Biopharma Ltd (ADR) has a Value Score of 74, which is considered to be undervalued.

RedHill Biopharma Ltd (ADR)’s price-to-book ratio is higher than its peers. This could make RedHill Biopharma Ltd (ADR) less attractive for value investors when compared to the industry median at 1.59.

You can read more about RedHill Biopharma Ltd (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.

China SXT Pharmaceuticals Inc’s Value Grade

Value Grade:

China SXT Pharmaceuticals Inc is a China-based pharmaceutical company that focuses on the research, development, manufacture, marketing and sales of Traditional Chinese Medicine Pieces (TCMP). The Company develops, manufactures and sells three types of TCMP products: advanced TCMP, fine TCMP and regular TCMP, and TCM Homologous Supplements (TCMHS) products. The Company sells its TCMP products under three brand names such as Suxuangtang, Hui Chun Tang and Tong Ren Tang. Most of its products are sold on a prescription basis across China.

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 SXT Pharmaceuticals Inc has a Value Score of 99, which is considered to be undervalued.

China SXT Pharmaceuticals Inc’s price-to-book ratio is higher than its peers. This could make China SXT Pharmaceuticals Inc less attractive for value investors when compared to the industry median at 1.59.

You can read more about China SXT 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.

Teva Pharmaceutical Industries Ltd (ADR)’s Value Grade

Value Grade:

Teva Pharmaceutical Industries Ltd is a Israeli-based pharmaceutical company. The Company operates through three segments: North America, Europe and International Markets. Each business segment manages entire product portfolio in its region, including generics, specialty and over-the-counter (OTC) products. In addition to these three segments, The Company has other activities, primarily the sale of active pharmaceutical ingredients (API) to third parties, certain contract manufacturing services and an out-licensing platform offering a portfolio of products to other pharmaceutical companies through its affiliate Medis.

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.

Teva Pharmaceutical Industries Ltd (ADR) has a Value Score of 70, which is considered to be undervalued.

Teva Pharmaceutical Industries Ltd (ADR)’s price-to-book ratio is higher than its peers. This could make Teva Pharmaceutical Industries Ltd (ADR) less attractive for value investors when compared to the industry median at 1.59.

You can read more about Teva Pharmaceutical Industries Ltd (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.

Canopy Growth Corp’s Value Grade

Value Grade:

Canopy Growth Corporation is a Canada-based cannabis and consumer packaged goods (CPG) 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-use 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 Storz & Bickel segment includes the production, distribution and sale of vaporizers. The BioSteel segment includes the production, distribution and sale of CPG including sports nutrition beverages, mixes, protein, gum and mints, some of which are blended with hemp-derived cannabidiol (CBD) isolate. This Works segment includes the production, distribution and sale of beauty, skincare, wellness and sleep products, some of which are blended with hemp-derived CBD isolate. Its brands include Doja, 7ACRES, Tweed, and Deep Space.

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 61, 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 1.59.

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 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.

• Fortress Biotech Inc stock has a Value Grade of B.
• I-Mab ADR stock has a Value Grade of A.
• RedHill Biopharma Ltd (ADR) stock has a Value Grade of B.
• China SXT Pharmaceuticals Inc stock has a Value Grade of A.
• Teva Pharmaceutical Industries Ltd (ADR) 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 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 Monday, November 13
• Which Is a Better Investment, Takeda Pharmaceutical Co Ltd (ADR) or Teva Pharmaceutical Industries Ltd (ADR) Stock?
• 5 Undervalued Pharmaceuticals Stocks for Friday, November 10
• Why Axsome Therapeutics Inc’s (AXSM) Stock Is Down 4.40%

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.