The pharmaceutical industry is well-positioned to experience substantial growth in the foreseeable years, thanks to the escalating incidence of chronic diseases, widespread adoption of new technologies, and relentless R&D in the space.
Given the industry tailwinds, it seems wise to invest in fundamentally sound pharma stocks Ipsen S.A. (IPSEY), Supernus Pharmaceuticals, Inc. (SUPN), and Kamada Ltd. (KMDA), currently trading at discounted valuations, for potential gains.
With its swift vaccine development, life-saving treatments, and unwavering commitment to research and development (R&D), the pharma industry has an irreplaceable role in fortifying global health.
Over the past two decades, the pharmaceutical industry has grown remarkably, with global revenues reaching $1.48 trillion in 2022. The increasing prevalence of chronic diseases such as cancer, diabetes, and heart disease globally has also substantially heightened the need for innovative and advanced pharmaceuticals and treatments.
Furthermore, the industry is experiencing a rapid transformation with the widespread adoption of advanced digital platforms, big data analytics, and Artificial Intelligence (AI). These digital technologies are revolutionizing critical and labor-intensive processes within the industry, allowing for greater efficiency and streamlining of operations.
Such technologies are also extensively employed for drug discovery and development, drug production, smart process automation, and predictive maintenance optimization. According to a report by Polaris Market Research, the global e-pharmacy market size is projected to reach $371.25 billion, growing at a 19.4% CAGR.
Given the industry’s promising growth prospects, it could be wise to scoop up shares of discounted and quality pharma stocks IPSEY, SUPN, and KMDA that have the potential to yield significant returns.
Let’s delve into the fundamentals of the featured stocks.
Ipsen S.A. (IPSEY)
Based in Boulogne-Billancourt, France, IPSEY is a biopharmaceutical company specializing in oncology, neuroscience, and rare diseases. It operates through two segments, Specialty Care and Consumer Healthcare. The company also excels in neurotoxin research.
On March 3, IPSEY completed the acquisition of Albireo Pharma, Inc., a leading innovator in bile-acid modulators that treat rare liver conditions. The acquisition is anticipated to strengthen IPSEY’s Rare Disease portfolio, offering promising therapeutics for pediatric and adult rare cholestatic-liver diseases and enhancing the company’s scientific and commercial capabilities.
On February 15, IPSEY, Université de Montréal, and IRICoR announced that IPSEY had exercised its option to exclusively acquire rights to a pre-clinical stage program with potential oncology applications. The company would now take on all global development activities and commercialization of the drug candidate.
IPSEY, Université de Montréal, and IRICoR also announced plans to expand their strategic partnership by entering into a new multi-year collaboration and option agreement for two discovery-stage programs in oncology. Such expansion initiatives are expected to enhance IPSEY’s position in the oncology sector.
In terms of forward EV/Sales, IPSEY is trading at 2.74x, 28.1% lower than the industry average of 3.81x. Its forward EV/EBITDA multiple of 8.00 is 38.7% lower than the industry average of 13.04. In addition, IPSEY’s forward Price/Sales of 2.87x is 34.9% lower than the industry average of 4.40x.
On April 27, IPSEY presented its sales performance for the first quarter of fiscal 2023 that ended March 31, 2023. The company’s total sales increased 7.8% year-over-year to €741.90 million ($792.50 million) for the quarter.
IPSEY’s sales during the fiscal year that ended December 31, 2022, increased 14.4% year-over-year to €3.03 billion ($3.23 billion). Its core operating income rose 13.5% from the year-ago value to €1.12 billion ($1.19 million).
The company’s core consolidated net profit grew 17.9% year-over-year to €872.40 million ($931.90 million), and its core EPS was €10.51, up 18.4% year-over-year.
The consensus revenue estimate of $3.48 billion for the fiscal year (ending December 2023) reflects a 7% year-over-year improvement. Likewise, the consensus revenue estimate of $3.65 billion for the next fiscal year (ending December 2024) indicates a 5.1% rise year-over-year. Moreover, the company topped the consensus revenue estimates in all four trailing quarters, which is impressive.
Shares of IPSEY have gained 20.1% over the past year to close the last trading session at $29.72.
IPSEY’s solid fundamentals are apparent in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
IPSEY has an A grade for Value and Stability and a B for Quality. It is ranked #20 in the 168-stock Medical - Pharmaceuticals industry.
In addition to the POWR Ratings I’ve just highlighted, you can see IPSEY’s ratings for Growth, Momentum, and Sentiment here.
Supernus Pharmaceuticals, Inc. (SUPN)
SUPN is a biopharmaceutical company that develops and markets products for Central Nervous System (CNS) diseases. Its diverse neuroscience portfolio includes treatments for epilepsy, migraine, Attention Deficit Hyperactivity Disorder (ADHD), and hypomobility in Parkinson’s Disease (PD), among others.
On February 14, SUPN announced its agreement with UBS Bank (UBS) USA for a credit line, granting the company an uncommitted demand-secured line of credit of up to $150 million. This additional capital would empower SUPN to enhance its financial strength and support its growth objectives.
Jack Khattar, SUPN’s President and CEO, said, “We are pleased to further enhance the strength and flexibility of our balance sheet with this line of credit.”
In terms of forward non-GAAP EV/Sales, SUPN is trading at 3.49x, 8.6% lower than the industry average of 3.81x. Likewise, the stock’s forward Price/Sales multiple of 3.09 is 29.7% lower than the industry average of 4.40.
For the first quarter that ended March 31, 2023, SUPN’s revenues marginally increased year-over-year to $153.76 million. Its non-GAAP operating earnings rose 8.9% year-over-year to $30.50 million. Also, as of March 31, 2023, the company’s current assets stood at $883.34 million, compared to $734.15 million as of December 31, 2022.
Analysts expect SUPN’s revenue for the fiscal year ending (December 2024) to increase 9.7% year-over-year to $668.75 million. The consensus EPS estimate of $2.08 for the same period reflects a 58.1% growth year-over-year. Also, the company surpassed the consensus revenue and EPS estimates in three of the trailing four quarters.
The stock has gained 23.7% over the past year to close the last trading session at $34.59.
SUPN’s positive outlook is reflected in its POWR Ratings. The stock has an overall rating of B, translating to Buy in our proprietary rating system.
SUPN has an A grade for Value and a B for Momentum and Quality. It is ranked #22 out of 168 stocks within the Medical – Pharmaceuticals industry.
Click here to access additional SUPN ratings (Stability, Growth, and Sentiment).
Kamada Ltd. (KMDA)
Based in Rehovot, Israel, KMDA supplies plasma-derived protein therapeutics. Its segments include Proprietary Products and Distribution. The company’s portfolio encompasses treatments for immune thrombocytopenic purpura, hepatitis B prevention in transplants, varicella post-exposure, intravenous AATD, and more.
On May 16, KMDA announced Swissmedic’s marketing authorization for Glassia® in Switzerland to treat adults with clinically evident emphysema resulting from severe hereditary Alpha-1 antitrypsin deficiency. These advancements would broaden KMDA’s market presence and offer crucial treatment alternatives to patients in Switzerland.
KMDA’s CEO, Amir London, said, “Switzerland is the first European country to approve Glassia for AATD, representing a significant milestone for Kamada, in a market which is currently estimated to be over $15 million annually.”
Furthermore, on May 3, the company announced FDA approval for its application to manufacture CYTOGAM®, marking it as the third product authorized for production at its Israeli facility. By leveraging its portfolio of four FDA-approved IgGs, KMDA anticipates ongoing expansion from these crucial products in 2023 and beyond.
In terms of forward EV/Sales, KMDA is trading at 1.59x, 58.3% lower than the industry average of 3.81x. Also, the stock’s forward Price/Sales of 1.62x is 63.1% lower than the industry average of 4.40x.
For the fiscal first quarter that ended March 31, 2023, KMDA’s revenues increased 9.3% year-over-year to $30.71 million, and its gross profit grew 4.8% year-over-year to $11.84 million. In addition, the company’s operating income rose 17.5% from the prior year’s period to $289 million. Its adjusted EBITDA grew 16.5% year-over-year to $3.83 million.
Analysts expect KMDA’s revenue to increase 9% year-over-year to $154.14 million for the fiscal year ending December 2024. The company’s EPS for the same year is expected to grow 38.5% from the prior year to $0.18. The stock has gained 25.1% year-to-date to close the last trading session at $5.19.
KMDA’s robust outlook is apparent in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.
KMDA has an A grade for Growth, Value, and Sentiment. It has ranked #14 within the same industry.
Click here to access additional KMDA ratings for Stability, Quality, and Momentum.
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IPSEY shares were trading at $29.72 per share on Wednesday afternoon, up $0.05 (+0.17%). Year-to-date, IPSEY has gained 13.53%, versus a 12.07% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
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