We recently compiled a list of the 7 Best Diabetes Stocks To Buy Now. In this article, we are going to take a look at where Pfizer Inc. (NYSE:PFE) stands against the other diabetes stocks.
According to the WHO, approximately 422 million individuals globally suffer from diabetes, with the majority residing in countries with low or middle incomes. Diabetes is directly responsible for an average of 1.5 million fatalities annually. Over the past few decades, there has been a steady rise in both the number of cases and the prevalence of diabetes. On the other hand, the International Diabetes Federation estimates that there are about 500 million diabetics worldwide, and that figure is projected to grow by 25% by 2030 and by 51% by 2045.
To help manage diabetes, both type 1 and type 2, one particular kind of medical device used is the continuous glucose monitor (CGM). The market has grown dramatically in recent years, and it has become a rapidly expanding section of diabetes care devices. The market for advanced diabetes care products — insulin pumps, pens, and continuous glucose monitoring (CGM) equipment, was estimated to be worth $21.8 billion in 2023 per GlobalData. Forecasts from GlobalData indicate that the market will reach revenues of $33.4 billion by 2030, rising at a CAGR of 6.34% over the forecast period.
As per the GlobalData marketed products database, the CGM category presently has 97 products. The vast majority of these devices are traditional CGMs, with only a few implantable sensors. According to the GlobalData pipeline products database, 133 products are either under development or approved. The figures show that this market segment is expanding quickly and is a hub for innovative new technology like implantable CGMs.
Today, CGM technology is also integrating AI. For example, Roche recently introduced new predictive AI-powered CGM technology (Accu-Chek SmartGuide). During the unveiling, Chief Medical Officer Julien Boisdron of Roche Diabetes Care referred to it as “a solution more than a CGM.” He described how the solution, which consists of two programs and a sensor, aids in both data visualization and prediction.
A new era of possibility has dawned in diabetes management and its associated complications. These novel techniques present significant opportunities for treating the combined problems associated with diabetes and obesity. A class of drugs called glucagon-like peptide-1 (GLP-1) agonists is used to treat obesity and type 2 diabetic mellitus (T2DM). As mentioned in our article, “10 Best GLP-1 and Weight Loss Stocks to Buy Now,” by 2030, the GLP-1 market, driven equally by obesity and diabetes, is expected to reach $100 billion. Thirty million GLP-1 users, or around 9% of the US population, may be on the medication by 2030.
The latest KFF Health Tracking survey indicates that 12% of American adults claim to have used a GLP-1 medicine at some point. Over the last half-decade, patients with diabetes now account for 43% of GLP-1 prescription users, while 22% of patients with obesity or overweight diagnoses also take the treatment. Adults who have heard “a little” or “a lot” about these drugs have gone from 70% to 82% over the past year, while those who have heard “a lot” or “a lot” about them have increased from 19% to 32%.
However, there are now difficulties as a result of the increased demand for these diabetes and weight reduction medications. A potential “explosion in the unlicensed sale of medication online” was indicated by the National Pharmacy Association (NPA). Semaglutides under the brand name Ozempic help individuals with type 2 diabetes control their blood sugar levels, but in some countries, such as the US under the brand name Wegovy, they are also widely used to help patients lose weight.
NPA chairman Nick Kaye stated:
“Pharmacists remain deeply concerned that the current medicine shortages crisis could lead to an explosion in the unlicensed sale of medication online.”
Methodology:
We sifted through holdings of ETFs exposed to the diabetes care industry and financial media to form an initial list of 20 diabetes stocks. Then we selected the 7 stocks that had the highest upside potential and market caps above $2 billion. The stocks are ranked in ascending order of the upside potential.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here)
A medical technician wearing protective gloves and a mask mixing a biopharmaceutical solution.
Pfizer Inc. (NYSE:PFE)
Analysts’ Upside Potential: 20.03%
Pfizer Inc. is a global company that finds, develops, produces, promotes, distributes, and sells biopharmaceutical pharmaceuticals in Europe and the US. In a recent, late-stage study involving four groups of people with weakened immune systems, PFE’s respiratory syncytial virus (RSV) vaccine Abrysvo produced a robust immunological response.
Positively, Pfizer Inc. (NYSE:PFE) has made notable progress in reducing expenses. The company expects to generate $4 billion in net cost reductions by 2024 and plans to cut its cost of goods sold (COGS) by $1.5 billion by 2027. It is anticipated that the emphasis on cost reduction and manufacturing efficiency will boost margins, as seen by the revised price goal and increased EPS projections for 2025.
The annual profit forecast raise is supported by robust sales in Q2 2024 of its medication for heart disease and cancer therapies acquired through a $43 billion transaction for Seagen, even as the company suffers with a significant decline in revenue from COVID-19 products. The market for Pfizer’s COVID-19 vaccination and therapy has fallen by billions of dollars annually.
As COVID fears subsided, investors abandoned Pfizer, and the company’s shares are now trading at around half their peak during the pandemic.
However, Pfizer is also moving forward with its pipeline for obesity treatment and next-generation vaccines, even though important efficacy and tolerability data are still awaited. Pfizer Inc. (NYSE:PFE) recently confirmed that it will proceed with the development of danuglipron, an oral tablet that acts as a GLP-1 agonist and is used to treat weight reduction and diabetes. This action is a result of the twice-daily formulation’s Phase 2 trial meeting effectiveness targets despite a high rate of patient withdrawals owing to adverse effects. A notable improvement is that there is no indication of liver damage with the once-daily form of danuglipron.
On the other hand, Leerink Partners analyst David Risinger’s Hold recommendation points out concerns about Pfizer’s long-term growth forecast, despite the positive developments. Due to the loss of exclusivity on a few major products like Pfizer-BioNTech COVID-19 Vaccine, the company’s long-term EPS growth is expected to drop by 3%, which will dampen expectations for strong price appreciation, per the analyst.
Analyst Chris Schott of J.P. Morgan stated that he anticipates Pfizer’s stock to stay in the current range because of its competitors’ higher expectations and the company’s slowing revenue growth.
“We believe stronger new launch performance and/or further progress on the pipeline will be necessary to significantly change the narrative,” he stated in a research note.
Parnassus Value Equity Fund stated the following regarding Pfizer Inc. (NYSE:PFE) in its first quarter 2024 investor letter:
“During the quarter, we added new positions in Pfizer Inc. (NYSE:PFE), NICE and Charter Communications. We purchased Pfizer to capture the potential upside from any turnaround following the COVID-induced boom-bust cycle of the last few years. Pfizer’s stock price sank by more than 40% in 2023 as COVID-19 vaccine revenues rolled off, providing an attractive entry point for us. The company completed its acquisition of Seagen, which should strengthen Pfizer’s pipeline in antibody-drug conjugates (ADC). Pfizer also offers an attractive dividend yield.”
PFE is one of the best diabetes stocks to buy now since it has promising growth potential, as seen by Truist Financial analyst Sriripa Devarakonda and Chris Shibutani of Goldman Sachs’ “Buy” rating on PFE given July 31. Overall, according to 13 analysts, PFE has a consensus Buy rating with an average price target of $34.54 and an upside potential of 19.72% from the current stock price of $28.85.
Overall PFE ranks 4th on our list of the best diabetes stocks to buy. While we acknowledge the potential of PFE as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PFE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
