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Top Pharmaceutical Stocks for Q1 2022

The pharmaceutical industry is made of companies that research, develop, make, and sell drugs and treatments used to treat or eradicate diseases, and vaccinate people. This includes some of the largest and best-known companies in the world, such as Pfizer Inc. (PFE), Merck & Co. Inc. (MRK), and AbbVie Inc. (ABBV). A number of pharmaceutical companies, including Pfizer, have seen a surge in their sales after winning approval from U.S. and foreign governments for vaccines aimed at preventing the COVID-19 virus.

Over the last 12 months, pharmaceutical stocks, based on the iShares U.S. Pharmaceuticals ETF (IHE), have lagged the performance of the overall market. IHE’s total return over the period was 9.1% compared to the Russell 1000’s total return of 24.4%. These market performance figures and all statistics in the tables below are as of Jan. 6, 2022.

Here are the top 3 pharmaceutical stocks with the best value, the fastest growth, and the most momentum.

Best Value Pharmaceutical Stocks

These are the pharmaceutical stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.

Best Value Pharmaceutical Stocks
 
Price ($)
Market Cap ($B)
12-Month Trailing P/E Ratio
Ironwood Pharmaceuticals Inc. (IRWD)
11.65
1.9
3.6
Organon & Co. (OGN)
31.51
8.0
5.3
Collegium Pharmaceutical Inc. (COLL)
19.13
0.7
7.3

Source: YCharts

Ironwood Pharmaceuticals Inc.: Ironwood Pharmaceuticals develops and manufactures drugs used to treat gastrointestinal and cardiovascular diseases. On Dec. 6, Sravan K. Emany was appointed senior vice president and chief financial officer of Ironwood. Emany is responsible for financial planning and reporting, tax, accounting, and investor relations for the company. Emany was previously corporate vice president, commercial excellence and chief strategy officer of Integra LifeSciences Holdings Corp. (IART).
Organon & Co.: Organon is a global women’s healthcare company that develops and produces medicines and other products across a range of areas, including reproductive health, heart disease, dermatology, allergies, and asthma. On Dec. 13, Organon announced that it had completed its acquisition of Forendo Pharma, a clinical-stage drug development company focused on novel treatments for women’s health. Forendo’s lead candidate, FOR-6219, is an investigational drug entering Phase 2 clinical development for endometriosis, a tissue disorder related to the uterus. The total consideration for the acquisition is up to $954 million.
Collegium Pharmaceutical Inc.: Collegium Pharmaceutical is a pharmaceutical company specializing in pain management. It develops medications to treat acute and chronic pain.

Fastest Growing Pharmaceutical Stocks

These are the top pharmaceutical stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.

Fastest Growing Pharmaceutical Stocks
 
Price ($)
Market Cap ($B)
EPS Growth (%)
Revenue Growth (%)
Takeda Pharmaceutical Co. Ltd. (TAK)
13.74
43.2
991.0
3.3
Dynavax Technologies Corp. (DVAX)
13.11
1.6
N/A (see company description)
707.1
Amphastar Pharmaceuticals Inc. (AMPH)
23.18
1.1
637.5
34.5

Source: YCharts

Takeda Pharmaceutical Co. Ltd.: Takeda Pharmaceutical Co. is a Japan-based company that researches, develops, manufactures, and sells pharmaceutical products, general medical products, and other healthcare items. The company focuses on treatments in the fields of oncology, digestive system diseases, and neurology.
Dynavax Technologies Corp.: Dynavax Technologies is a biopharmaceutical company specializing in developing immunotherapy treatments. It develops and commercializes novel vaccines and is collaborating with other biopharmaceutical companies to develop vaccines to treat COVID-19. The company reported a net loss in Q3 2021, ended Sept. 30, versus net income for the prior-year quarter. Total revenues for Q3 2021 were more than 8 times higher than Q3 2020, driven by strong revenue growth for the company’s CpG 1018 adjuvant contained in the company’s FDA-approved hepatitis B vaccine. Net losses were impacted by a change in fair value of warrant liability. Because the company’s EPS went from positive in the year-ago quarter to negative in the most recent quarter, an EPS growth rate could not be calculated for the table above.
Amphastar Pharmaceuticals Inc.: Amphastar Pharmaceuticals is a biopharmaceutical company that develops, manufactures, and sells generic and injectable, inhalation, and intranasal products. It also sells an insulin active pharmaceutical ingredient. Net income attributable to Amphastar for Q3 2021, ended Sept. 30, grew more than sevenfold YOY, as revenues surged to record levels. The company attributed the growth to the strength of its glucagon, Primatene Mist, and epinephrine products.

Pharmaceutical Stocks with the Most Momentum

These are the pharmaceutical stocks that had the highest total return over the last 12 months.

Pharmaceutical Stocks with the Most Momentum
 
Price ($)
Market Cap ($B)
12-Month Trailing Total Return (%)
Dynavax Technologies Corp. (DVAX)
13.11
1.6
185.0
Evolus Inc. (EOLS)
6.13
0.3
61.3
Eli Lilly and Co. (LLY)
259.33
248.1
60.2
Russell 1000
N/A
N/A
24.4
iShares U.S. Pharmaceuticals ETF (IHE)
N/A
N/A
9.1

Source: YCharts

Dynavax Technologies Corp.: See company description above.
Evolus Inc.: Evolus is a medical aesthetics company. The company’s FDA-approved commercial product is Jeuveau, a prescription medicine for the facial aesthetics market. On Dec. 20, the company announced that it had been added to the Nasdaq Biotechnology Index, effective immediately.
Eli Lilly and Co.: Eli Lilly is a drug manufacturing company that develops, makes, and sells pharmaceutical products. The company’s offerings include diabetes and other endocrinology products, immunology, neuroscience, and other products.

The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

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