The pharmaceutical market is projected to grow significantly in the coming years, owing to technological innovation and the growing demand for personalized medicine. To that end, affordable pharma stocks ACADIA Pharmaceuticals ( ACAD ), Astellas Pharma ( ALPMY ), and Spero Therapeutics ( SPRO ), trading below $20, could be solid buys right now. Read on….
The pharmaceutical industry is undergoing a transformative boom, leveraging digital platforms, big data analytics, cloud computing and AI to drive innovation. Moreover, the growing demand for personalized medicines and increased R&D activities should give an additional impetus to the already developing industry.
Therefore, powerful pharmaceutical stocks ACADIA Pharmaceuticals Inc. (ACAD), Astellas Pharma Inc. (ALPMY), and Spero Therapeutics, Inc. (PRO), trading under $20, could be smart portfolio additions right now.
Global drug use has increased by 14% over the past five years, and a By 2028, an increase of 12% is predicted., bringing annual use to 3.80 trillion prescribed daily doses. The increasing prevalence of chronic diseases and the increasing demand for medical care among the aging population have contributed to the resilience of the pharmaceutical market in the future.
With increasing demand for the treatment of chronic diseases such as cancer, diabetes, and more, along with increasing research and development activity for new drugs and treatments, the drug discovery informatics market is anticipated to reach 7.90 billion dollars by 2032, growing at a CAGR of 10.5%. These growing trends also include the growth and demand for personalized medicine, which has strengthened the pharmaceutical market.
According to the American Association of Health System Pharmacists, constant lack of medicines in the US have reached the highest historical level since 2001, with 323 drugs at the end of the first quarter of this year. With increasing demand for drugs, this shortage will potentially drive up prices.
In addition, pharmaceutical firms are adopting technology for personalized drug manufacturing, requiring adaptable devices. In 2023, AI emerged as crucial in drug discovery and is expected to continue to increase research efficiency in 2024.
With these favorable trends in mind, let's take a look at the basics of all three Medicine – Pharmaceuticals stocks, starting with the third choice.
Stock #3: ACADIA Pharmaceuticals Inc. (ACAD)
ACAD develops and commercializes innovative medicines that address unmet medical needs in central nervous system (CNS) disorders and rare diseases in the US
In terms of EV/Sales, ACAD is trading at 2.62x, 25.9% lower than the industry average of 3.54x. The stock's forward price/sales multiple of 3.02 is 17.8% lower than the industry average of 3.67.
Over the past three and five years, its revenue grew at CAGRs of 18% and 26.6%, respectively, while its total assets grew at 6.8% CAGR over the past five years.
For the fiscal fourth quarter ended December 31, 2023, ACAD's total revenue increased 69.3% year-over-year to $231.04 million. Additionally, its operating income reached $34.94 million, compared to a loss from operations of $46.06 million in the year-ago quarter.
For the same quarter, its net income and earnings per share stood at $45.80 million and $0.28, compared to net loss and net loss per share of $41.73 million and $0.26, respectively.
The Street expects ACAD's revenue for the fiscal first quarter ended March 2024 to grow 76.3% year-over-year to $208.82 million. Its EPS is expected to be $0.06 for the same quarter. The company beat consensus revenue estimates in three of the trailing four quarters, which is impressive.
The stock fell 1.8% intraday to close the last trading session at $17.41.
of ACAD POWR Ratings reflect her positive perspectives. The stock has an overall rating of B, equal to Buy in our proprietary rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted on an optimal scale.
ACAD has an A for Growth and a B for Value and Quality. within Medicine – Pharmaceuticals industry, it ranks 28 out of 160 stocks.
To see additional POWR current ratings, stability and sentiment for ACAD, Click here.
Stock #2: Astellas Pharma Inc. (ALPMY)
Headquartered in Tokyo, Japan, ALPMY manufactures, markets and imports and exports pharmaceutical products in Japan and internationally. The company operates primarily in the Pharmaceutical Products business segment.
On March 28, ALPMY announced that the Center for Drug Evaluation (CDE) of the China National Medical Products Administration (NMPA) accepted the Supplemental Biologics License Application (sBLA) for enfortumab vedotin with KEYTRUDA (pembrolizumab) as a combination therapy to first-line treatment of adult patients with previously untreated locally advanced or metastatic urothelial cancer (la/mUC).
If approved, enfortumab vedotin with KEYTRUDA has the potential to change the treatment paradigm, becoming the first combination treatment to offer an alternative to platinum-containing chemotherapy, the current standard of care in first-line la/mUC.
On March 26, ALPMY announced that the US Centers for Medicare and Medicaid Services assigned a unique and permanent Healthcare Common Procedure Coding System (HCPS) J code to ISERVAY (avacincaptad pegol intravitreal solution) for the treatment of geographic atrophy secondary to age. macular degeneration. The new J code, J2782, is effective April 1.
Its annual dividend rate of $0.47 per share translates to a dividend yield of 4.62% above the current share price. Its four-year average yield is 2.76%.
In terms of EV/Sales, ALPMY trades at 2.17x, 38.7% lower than the industry average of 3.54x. The stock's price/sales multiple of 1.80 is 51.1% lower than the industry average of 3.67.
Over the past three and five years, its revenue grew at a CAGR of 7.2% and 3.4%, respectively, while its total assets grew at a CAGR of 13.6% and 11.8% over the same periods.
For the nine months ended December 31, 2023, ALPMY's revenue and gross profit rose 2.1% and 3.4% year-over-year to ¥1.19 trillion ($7.77 billion) and ¥969.81 billion ($6.33 billion), respectively. . Additionally, its core operating profit stood at ¥149.62 billion ($977.26 million).
For the same period, its core profit and core earnings per share stood at ¥120.51 billion ($787.09 million) and ¥67.20, respectively.
The Street expects ALPMY's revenue for the fiscal year ending March 2024 to grow 124.2% year over year to $10.27 billion. Its EPS is expected to be $0.24 for the same period. The company beat consensus revenue estimates in three of the trailing four quarters.
The stock has gained slightly intraday to close the last trading session at $10.29.
ALPMY's POWR ratings reflect this promising outlook. It has an overall rating of B, which translates to a Buy in our proprietary rating system.
ALPMY has an A for stability and a B for value. Within the same industry, it ranks #21.
For other ALPMY ratings (Growth, Momentum, Sentiment and Quality), Click here.
Stock #1: Spero Therapeutics, Inc. (PRO)
SPRO identifies, develops and commercializes new treatments for multidrug-resistant (MDR) bacterial infections and rare diseases in the US
On February 28, SPRO received approval from the US Food and Drug Administration (FDA) for its investigational new drug application to evaluate SPR206 in a Phase 2 clinical study. SPR206 is a novel, orally administered antibiotic intravenous (IV) next-generation polymyxin for the treatment of hospital-acquired and ventilator-associated bacterial pneumonia caused by MDR gram-negative bacterial infections.
On January 2, SPRO announced the first patient, first visit for PIVOT-PO, a global Phase 3 clinical trial of tebipenem HBr in patients with complicated urinary tract infections, including acute pyelonephritis.
In terms of EV/Sales, SPRO trades at 0.43x, 87.8% lower than the industry average of 3.54x. The stock's price/sales multiple of 1.90 is 48.3% lower than the industry average of 3.67.
Over the past three and five years, its revenues grew at CAGRs of 123.2% and 92.1%, respectively, while its total assets grew at 5.9% and 7.2% CAGRs over the same periods.
For the fiscal fourth quarter ended December 31, 2023, SPRO's total revenue and net income attributable to SPRO common stockholders increased 55% and 91.2% year-over-year to $73.52 million and $51.19 million, respectively. respectively.
As of December 31, 2023, SPRO's total current assets and accrued expenses and other current liabilities amounted to $131.21 million and $6.56 million, compared to $113.57 million and $8.97 million as of December 31, 2022, respectively.
The Street expects SPRO's revenue for the fiscal first quarter ended March 2024 to grow 940.8% year-over-year to $21.53 million. The company beat consensus revenue estimates in each of the trailing four quarters and EPS consensus estimates in three of the trailing four quarters.
The stock has gained 46.2% over the past six months to close the last trading session at $1.71. During the last three months, it has gained 17.1%.
SPRO's strong prospects are reflected in its POWR ratings. The stock has an overall rating of B, equal to Buy in our proprietary rating system.
The SPRO has an A for value and a B for feel and quality. It is ranked #18 within the same industry.
Click here for additional POWR ratings for SPRO (Growth, Momentum and Stability).
What should be done next?
43-year investment veteran Steve Reitmeister has just released his market outlook for 2024, along with his trading plan and top 11 picks for the year ahead.
Shares of ALPMY were flat in premarket trading on Friday. Year-to-date, ALPMY is down -13.53%, versus a 9.32% gain in the benchmark S&P 500 over the same period.
About the Author: Neha Panjwani
From her school days, Neha nurtured a deep fascination for finance, a passion that led her to a career as an investment analyst after completing her bachelor's degree in commerce. Currently enrolled in the CFA program, Neha is dedicated to further enriching her knowledge of investment fundamentals. Neha's primary objective is to assist retail investors in discerning optimal investment opportunities by diligently evaluating the core aspects of financial instruments, with a primary focus on stocks and ETFs. Its commitment lies in empowering individuals to make informed and strategic investment decisions in the dynamic world of finance.
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