The pharmaceutical industry entered the limelight in early 2020 as the COVID-19 pandemic challenged the global healthcare sector. Pharmaceutical industries in developing countries have registered especially massive gains over the last two years, and international competition in this segment has thereby reached new heights.
Despite an acute shortage of staff and an apparent supply crunch, the demand for the pharmaceutical industry will likely not decline anytime soon because chronic diseases continue to surge. Investors’ interest in this space is evidenced by the VanEck Vectors Pharmaceutical ETF’s (PPH) 6.8% returns over the past three months.
Thus, we think it could be wise to bet on fundamentally strong pharmaceutical stocks Eli Lilly and Company (LLY) and Novo Nordisk A/S (NVO), which are down more than 5% year-to-date. These companies are well-positioned to generate significant ROI in the coming months.
Click here to checkout our Healthcare Sector Report for 2022
Eli Lilly and Company (LLY)
LLY discovers, develops, and markets human pharmaceuticals worldwide. It is a global healthcare leader that unites caring with discovery to create medicines that make life better for people worldwide. LLY is based in Indianapolis, Ind.
On Feb. 11, 2022, LLY announced that the FDA had issued an Emergency Use Authorization (EUA) for bebtelovimab, an antibody that demonstrates neutralization against the COVID-19 omicron variant. This is a significant enhancement to the company's existing product portfolio.
For its fiscal year 2021 fourth quarter, LLY's revenue increased 7.5% year-over-year to $8 billion. Its non-GAAP net income came in at $2.27 billion, up 7.6% year-over-year, while its non-GAAP EPS was $2.49, up 7.8% year-over-year.
LLY's revenue is expected to be $27.19 billion for 2023, representing a 7.1% year-over-year increase. In addition, the company's EPS is expected to increase 12.6% year-over-year to $8.73 for 2023. The stock has declined 8% year-to-date to close yesterday's trading session at $254.17.
It's no surprise that LLY has an overall A rating, which equates to a Strong Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock has a B grade for Growth, Stability, Sentiment, and Quality. LLY is ranked #12 of 180 stocks in the Medical - Pharmaceuticals industry. Click here to see the additional POWR Ratings for LLY (Value and Momentum).
Novo Nordisk A/S (NVO)
Headquartered in Bagsvaerd, Denmark, NVO is a healthcare company that engages in the worldwide research, development, manufacture, and marketing of pharmaceutical products. It operates in two segments: Diabetes and Obesity care; and Biopharm.
On Feb. 2, 2022, Lars Fruergaard Jørgensen, President and CEO, said, "We are very pleased with the double-digit sales growth in 2021 and the progress we have made on our strategic aspirations. The results reflect that almost 35 million people with diabetes are now benefiting from our treatments worldwide. In obesity, we are making progress in resolving the Wegovy® supply issue and we expect to be able to meet demand from people living with obesity in the U.S. in the second half of 2022".
NVO's net sales increased 10.9% year-over-year to DKK 140.8 billion ($20.97 billion) for the fourth quarter, ended Dec. 31, 2021. Its net profit came in at DKK 47.76 billion ($7.11 billion), up 13.3% year-over-year. Furthermore, its EPS came in at DKK 20.74, up 15.2% year-over-year.
NVO's revenue is expected to grow 12.5% to $23.71 billion in its fiscal year 2022. Its EPS is estimated to increase 12.8% to $3.71 in 2023. In addition, it surpassed the consensus EPS estimates in three of the trailing four quarters. The stock has declined 6.5% in price year-to-date to close yesterday’s session at $104.67.
NVO's POWR Ratings reflect solid prospects. The company has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has an A grade for Quality and a B grade for Value, Sentiment, and Stability. NVO is ranked #8 in the Medical - Pharmaceuticals industry. Click here to see the additional POWR Ratings for NVO (Growth and Momentum).
Click here to checkout our Healthcare Sector Report for 2022
LLY shares were trading at $256.98 per share on Thursday afternoon, up $2.81 (+1.11%). Year-to-date, LLY has declined -6.58%, versus a -8.14% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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