In this article, we discuss the 5 best pharmaceutical stocks to buy in 2022. If you want our detailed analysis of the pharmaceutical industry and these stocks, go directly to 10 Best Pharmaceutical Stocks to Buy in 2022.
5. Amgen Inc. (NASDAQ:AMGN)
Number of Hedge Fund Holders: 52
Based in Thousand Oaks, California, Amgen Inc. (NASDAQ:AMGN) is a multinational biopharmaceutical company that produces medicines and therapeutic biologicals for migraine, anemia, acute lymphoblastic leukemia, arthritis, osteoporosis, and asthma.
Amgen Inc. (NASDAQ:AMGN) reported earnings for the quarter ending December 2021 on February 7, announcing EPS of $4.36, exceeding estimates by $0.35. Its $6.85 billion in revenue missed the market consensus by $22.57 million however. In 2022, the company plans to buy back $6 billion to $7 billion of its shares, including up to $6 billion worth of stock in the first quarter alone.
On December 3, Amgen Inc. (NASDAQ:AMGN) declared a $1.94 per share quarterly dividend, a 10.2% increase from its prior dividend of $1.76. With a forward yield of 3.83%, Amgen Inc. (NASDAQ:AMGN)’s dividend is payable on March 8 to shareholders of record on February 15. Amgen Inc. (NASDAQ:AMGN) has consistently increased its dividends for 10 years.
Among the hedge funds monitored by Insider Monkey in Q4 2021, 52 funds were bullish on Amgen Inc. (NASDAQ:AMGN), unchanged from the prior quarter. John Overdeck and David Siegel’s Two Sigma Advisors is the largest stakeholder of Amgen Inc. (NASDAQ:AMGN) as of the end of 2021, with 1.81 million shares worth approximately $407 million.
Here is what ClearBridge Sustainability Leaders Strategy had to say about Amgen, Inc. (NASDAQ:AMGN) in its Q3 2021 investor letter:
“In health care, Amgen, a biotechnology company, has endured several pipeline setbacks recently, including a slow transition of its Lumakras treatment into first-line lung cancer, a slower than expected development of its treatment for myeloma as well as the company’s asthma treatment Tezepelumab missing its primary endpoint in a Phase III study. We remain positive on the stock, with Amgen’s investments in biosimilars and its pipeline part of our long-term thesis.”
4. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 61
Headquartered in Indianapolis, Indiana, Eli Lilly and Company (NYSE:LLY) is a pharmaceutical company that is known for manufacturing polio vaccines and insulin. The company markets its products in 125 countries.
Eli Lilly and Company (NYSE:LLY) posted its Q4 results on February 3, reporting EPS of $2.49, missing estimates by $0.02. The company’s revenue over the period came in at $8 billion, up 7.53% from the prior-year quarter, surpassing estimates by $113.13 million.
On February 14, Eli Lilly and Company (NYSE:LLY) was awarded a $1.08 billion fixed price contract for the manufacture, distribution, and storage of Bebtelovimab in support of the national emergency response to COVID-19.
On February 4, Morgan Stanley analyst Matthew Harrison lowered the firm’s price target on Eli Lilly and Company (NYSE:LLY) to $265 from $272 and kept an ‘Overweight’ rating on the shares. He adjusted his model following the company’s Q4 report, along with which management gave guidance that they plan to delay donanemab’s accelerated approval filing until later this year.
According to the Q4 database of Insider Monkey, 61 hedge funds were bullish on Eli Lilly and Company (NYSE:LLY), with collective stakes amounting to $5.31 billion, compared to 62 funds a quarter earlier, holding stakes in Eli Lilly and Company (NYSE:LLY) worth approximately $4.29 billion.
Here is what Baron Funds had to say about Eli Lilly and Company (NYSE:LLY) in its Q2 2021 investor letter:
“We started a position in Eli Lilly and Company, a large-cap pharmaceutical company. We think Lilly has a healthy base business with limited near-term patent expirations, a strong pipeline, and potential for significant margin expansion, which should translate to high single-digit revenue growth and mid-teens earnings growth over the next five years. Lilly’s pipeline includes donanemab, a potential blockbuster drug which the company is developing for Alzheimer’s disease and which recently received Breakthrough Therapy Designation by the FDA.”
3. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 66
Bristol-Myers Squibb Company (NYSE:BMY) is a multinational pharmaceutical company that develops prescription pharmaceuticals for diseases including cancer, HIV, AIDS, cardiovascular disease, diabetes, hepatitis, rheumatoid arthritis, and psychiatric disorders. Bristol-Myers Squibb Company (NYSE:BMY) is headquartered in New York City.
On February 4, Bristol-Myers Squibb Company (NYSE:BMY) reported its fourth quarter results. The company posted EPS of $1.83, exceeding estimates by $0.03. Revenue for the period jumped 8.29% year-over-year to $11.99 billion, surpassing estimates by $12.68 million.
Goldman Sachs analyst Chris Shibutani initiated coverage of Bristol-Myers Squibb Company (NYSE:BMY) on December 17 with a ‘Buy’ rating and $72 price target, implying 6.7% upside from current levels. The analyst sees an attractive entry point in the shares, as he believes current levels reflect “overly pessimistic views” on the outlook for the company’s new product launches and key pipeline assets.
Bristol-Myers Squibb Company (NYSE:BMY) priced a public offering of senior unsecured notes on February 15 with a combined principal amount of $6 billion. The offer is expected to close on March 2.
Bristol-Myers Squibb Company (NYSE:BMY) announced a quarterly dividend per share of $0.54 on December 13, which is a 10.2% increase from its prior dividend of $0.49. The dividend was paid on February 1 to shareholders of record on January 7.
Among the hedge funds tracked by Insider Monkey, 66 hedge funds were bullish on Bristol-Myers Squibb Company (NYSE:BMY) as of December 31, with collective stakes amounting to $3.31 billion. Warren Buffett’s Berkshire Hathaway is one of the leading Bristol-Myers Squibb Company (NYSE:BMY) stakeholders with 5.2 million shares valued at $320 million, though the holding company unloaded 77% of its BMY stake during Q4.
Wedgewood Partners mentioned Bristol-Myers Squibb Company (NYSE:BMY) in its Q4 2020 investor letter. Here is what the fund had to say:
“Bristol-Myers Squibb recently reported accelerating sales as much of the medical services industry returned to work. The Company continues to expect double-digit earnings growth over the next few years, driven by existing drugs, in addition to a broad pipeline of new drugs and indications. While the market remains fixated on a couple of patent expirations that could occur over the next several years, we think this is well-known at this point, yet the market still undervalues a couple of key acquisitions the Company has made in the past few years, particularly Celgene, which was acquired for a song.”
2. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 80
Merck & Co., Inc. (NYSE:MRK) is an American pharmaceutical company that develops and markets pharmaceuticals, generic drugs, over-the-counter drugs, vaccines, diagnostics, and veterinary medicine.
On February 3, Merck & Co., Inc. (NYSE:MRK) reported its EPS for the fourth quarter, which came in at $1.80, exceeding estimates by $0.28. Merck & Co., Inc. (NYSE:MRK)’s revenue for the period came in at $13.52 billion, up 8.05% year-on-year, outperforming estimates by $308.78 million.
On January 25, Merck & Co., Inc. (NYSE:MRK) declared a $0.69 per share quarterly dividend, in line with its previous payout. The latest dividend is payable on April 7 to shareholders of record on March 15.
JPMorgan analyst Chris Schott lowered the investment bank’s price target on Merck & Co., Inc. (NYSE:MRK) to $95 from $100 on January 28 and kept an ‘Overweight’ rating on the shares ahead of the company’s Q4 results. The analyst does not expect any major surprises in relation to the company’s 2022 guidance based on the positive momentum he’s seeing in Merck & Co., Inc. (NYSE:MRK)’s core business and with near-term upside from molnupiravir sales.
Following the fourth quarter of 2021, 80 hedge funds were bullish on Merck & Co., Inc. (NYSE:MRK), holding stakes worth $3.78 billion. Arrowstreet Capital is a prominent Merck & Co., Inc. (NYSE:MRK) stakeholder, with 8.32 million shares worth $638 million.
Here is what Miller Howard Investments had to say about Merck & Co., Inc. (NYSE:MRK) in its Q3 2021 investor letter:
“While optimistic about a recovery, we continue to balance our cyclical holdings with dividend-payers in stable, less economically-sensitive industries. We hold three pharmaceutical companies, (which includes) Merck (MRK). All three have strong cash flows and balance sheets, making their high dividends reasonably safe. The investment controversy surrounding these pharma companies is whether they can develop or acquire new products to replace their current blockbuster drugs. The low valuations on these stocks reflects what we believe to be undue pessimism by investors on the prospects for new drugs.”
1. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 82
AbbVie Inc. (NYSE:ABBV), the Illinois-based biopharmaceutical company that provides medicines and vaccines for therapeutic focus areas including immunology, oncology, neuroscience, and virology, tops the list of Best Pharmaceutical Stocks to Buy in 2022.
On February 4, Mizuho analyst Vamil Divan raised the company’s price target on AbbVie Inc. (NYSE:ABBV) to $166 from $154 and kept a ‘Buy’ rating on ABBV shares, stating that he continues to see AbbVie Inc. (NYSE:ABBV) as a Top Pick since the company’s “more diversified growth story” exceeded expectations in the fourth quarter of 2021.
AbbVie Inc. (NYSE:ABBV) reported earnings for the quarter ending December 2021 on February 2. The company announced EPS of $3.31, beating estimates by $0.03. However, its $14.89 billion in revenue missed consensus estimates by approximately $73 million.
Of the 82 hedge funds that were bullish on AbbVie Inc. (NYSE:ABBV) at the end of Q4 2021, Orbis Investment Management held a significant stake in the company, with more than 3 million shares worth $324.3 million.
On October 29, AbbVie (NYSE:ABBV) declared a $1.41 per share quarterly dividend, an 8.5% increase from its prior dividend of $1.30. The dividend was paid on February 15 to shareholders of record on January 14.
Here is what Miller Howard Investments had to say about AbbVie Inc. (NYSE:ABBV) in its Q3 2021 investor letter:
“While optimistic about a recovery, we continue to balance our cyclical holdings with dividend-payers in stable, less economically-sensitive industries. We hold three pharmaceutical companies, (which includes) AbbVie (ABBV). All three have strong cash flows and balance sheets, making their high dividends reasonably safe. The investment controversy surrounding these pharma companies is whether they can develop or acquire new products to replace their current blockbuster drugs. The low valuations on these stocks reflects what we believe to be undue pessimism by investors on the prospects for new drugs.”
You can also take a look at Early Retirement Portfolio: 15 Stocks to Live Off Dividends and 10 Best Dividend Kings to Buy for 2022.
