In this article, we discuss the 5 best pharma stocks to buy now. If you want to see more stocks in this selection, check out the 10 Best Pharma Stocks To Buy Now.
5. Cardinal Health, Inc. (NYSE:CAH)
Number of Hedge Fund Holders: 44
Cardinal Health, Inc. (NYSE:CAH) is a Dublin, Ohio-based pharmaceutical distributor and a maker of medical laboratory products.
Cardinal Health, Inc. (NYSE:CAH) offers investors a forward dividend yield of 2.91% as of October 21. The company is a member of the Dividend Aristocrat list, as it has been increasing its dividends for the past 25 years. Cardinal Health, Inc. (NYSE:CAH) is making a transition as it is focusing on leveraging the performance of its strong pharmaceutical segment and possibly spin-off the medical devices segment. The pharmaceutical segment of the company saw an increase of 14% YoY in revenues in 2021.
Furthermore, Cardinal Health, Inc. (NYSE:CAH) entered into an agreement with activist investor Elliot Management in early September. Under the agreement, the company has agreed to elect four new directors to its board at the next annual general meeting. Earlier, Cardinal Health, Inc. (NYSE:CAH) also announced that its CEO Mike Kaufmann will step down and will be succeeded by CFO Jason Hollar. The move reflects a different direction undertaken by the company to boost “shareholder value creation” under the new leadership team. These strategic moves by the company are expected to provide significant upside to investors in the future, making it one of the best pharmaceutical stocks to buy now.
Citadel Investment Group raised its stake in Cardinal Health, Inc. (NYSE:CAH) by 2006% during Q2 2022.
4. Moderna, Inc. (NASDAQ:MRNA)
Number of Hedge Fund Holders: 45
Moderna, Inc. (NASDAQ:MRNA) is a Cambridge, Massachusetts-based biotech company that has pioneered mRNA technology.
Moderna, Inc. (NASDAQ:MRNA) is further leveraging its technology to formulate personalized cancer vaccines (PCVs). The company received a boost earlier this month when pharma giant Merck opted to collaborate with Moderna, Inc. (NASDAQ:MRNA) in developing and commercializing Moderna’s PCV. The partnership was a build-up of a collaboration agreement that was signed previously. Analysts expect the Phase-II results of the PCV study in treating adjuvant melanoma to be positive.
Moderna, Inc. (NASDAQ:MRNA) boasts a return on invested capital (ROIC) of 36% while trading at 3.5X earnings. These fundamentals, coupled with very low levels of debt, make analysts believe that the company is among the best pharmaceutical stocks to invest in.
Here’s what Baron Funds said about Moderna, Inc. (NASDAQ:MRNA) in its Q3 2022 investor letter:
“Within biotechnology, underperformance of Moderna, Inc. (NASDAQ:MRNA) and lower exposure to this better performing sub-industry weighed the most on relative performance. Shares of Moderna, a leader in the emerging field of mRNA-based vaccines and therapeutics, declined due to increasing uncertainty around what a booster market could look like as COVID shifts away from pandemic status and becomes an increasingly commercial market rather than government funded.”
3. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)
Number of Hedge Fund Holders: 45
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is a Boston, Massachusetts-based biotech company that has paved the way for developing and commercializing treatment for cystic fibrosis (CF). Furthermore, the company is working on advanced gene therapies as well.
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is working on developing non-opioid analgesics to treat chronic neuropathic pain. The market for pain medication is a significant one, but developing an effective non-opioid analgesic has been challenging for many pharmaceutical companies. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) has also announced that it will file the Biologics License Application (BLA) for exagamglogene autotemcel (exa-cel) by the start of November and anticipates completing the submission by Q1 2023. This was a positive development as investors did not expect the filing to be done by Q4 2023. Exa-cel is aimed towards treating sickle cell disease. Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) has also been given the go-ahead from the FDA to initiate the first-in-human trial for VX-634, which is a small molecule AAT corrector.
For FY22, Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) has forecasted sales from CF treatments to be around $8.6 billion to $8.8 billion. Analysts expect Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) to continue growing its therapy pipeline. The company has strong growth potential over the next 5-10 years, making it one of the best pharmaceutical stocks to hold in the long run.
2. Amgen Inc. (NASDAQ:AMGN)
Number of Hedge Fund Holders: 55
Amgen Inc. (NASDAQ:AMGN) is a Thousand Oaks, California-based biotech company focused on innovation and differentiation in producing medicines to treat chronic diseases. The company is at the second position on our list of the ten best pharmaceutical stocks to buy now.
On October 11, Matthew Harrison at Morgan Stanley upgraded Amgen Inc. (NASDAQ:AMGN) stock from an Equal Weight to an Overweight rating and also increased the target price from $257 to $279. The analyst thinks that the mid-term potential of the company’s drug pipeline is underappreciated by the broader market. Furthermore, Amgen Inc. (NASDAQ:AMGN) can offer defensive positioning in a depressed market.
Amgen Inc. (NASDAQ:AMGN) also offers attractive short-term treatment options in the form of AMG133 for obesity management and biosimilar Amjevita. Harrison believes that AMG133 can achieve similar weight loss results as compared to Eli Lilly’s Tirzeptide at maximum dosage.
Here’s what Aristotle Capital Management said about Amgen Inc. (NASDAQ:AMGN) in its Q2 2022 investor letter:
“Amgen Inc. (NASDAQ:AMGN), the pharmaceutical company focused on biotechnology-based therapeutics, was also a top contributor for the quarter. The company reported solid results, with a variety of products, such as bone-strengthening drugs Prolia and EVENITY, contributing to overall revenue growth. Amgen continued to increase the market share for cholesterol drug Repatha (a catalyst we had originally identified), delivering record quarterly sales as the drug’s usage expands with high-risk patients who have not yet had a cardiovascular event, and as barriers for prescribers, healthcare systems and patients are removed. In addition, we believe the company is poised to gain market share with its biosimilars (akin to generic versions of biologic drugs), also a previously identified catalyst. Biosimilars accounted for over $2 billion in revenue in 2021, and we believe this has the potential to more than double by the end of the decade, accelerated by six additional biosimilars (for a total of 11 products on the market). This includes the upcoming launch in the U.S. of arthritis treatment Amjetiva in January 2023. Meanwhile, the company is advancing its robust pipeline of early- and late-stage assets, with several phase III results due this year. These developments have caused us to remain enthusiastic about Amgen’s ability to build on its decades of success developing novel treatments using biopharmaceuticals.”
1. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 70
Pfizer Inc. (NYSE:PFE) is a New York-based pharmaceutical giant that is widely known as one of the best pharmaceutical stocks in the industry.
Pfizer Inc. (NYSE:PFE) stock offers an attractive forward dividend yield of 3.63% as of October 21 and has increased its dividend for the past 12 consecutive years. Furthermore, the company has paid quarterly dividends for the last 335 consecutive quarters. In the past decade, Pfizer Inc. (NYSE:PFE) has increased its dividend by more than 82%.
Furthermore, during Q2 2022, Pfizer Inc. (NYSE:PFE) reported the highest quarterly revenue in history. Pfizer Inc. (NYSE:PFE) is also looking to obtain approval for Paxlovid for treating vaccinated and non-vaccinated patients suffering from COVID-19. The company has guided that it will generate revenue of $22 billion from the sales of Paxlovid during this year.
Here’s what Carillon Tower Advisers said about Pfizer Inc. (NYSE:PFE) in its Q2 2022 investor letter:
“Pfizer Inc. (NYSE:PFE) is a research-based global biopharmaceutical company. The United States agreed to pay Pfizer and its vaccine partner more than $3 billion in a deal for their messenger RNA shots against COVID-19. Additionally, the U.S. Food and Drug Administration authorized the company’s COVID vaccine for children aged 5 to 11.”
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