The pharmaceutical sector has thrived in recent years and is anticipated to reach $1.5 trillion this year. The integration of innovative technologies has opened a new world of possibilities for the industry.
Moreover, customized medicine should potentially bolster the healthcare sector, particularly in treatment and prevention. The global market for personalized medicines is projected to reach a revised size of $740.30 billion by 2030, growing at a CAGR of 4.8%.
Furthermore, e-commerce in healthcare has been gaining traction amid increasing awareness, availability of vital drugs online, and attractive discounts provided by e-pharmacies. The global e-pharmacy market is anticipated to expand at a CAGR of 19.5% until 2030.
Given this backdrop, fundamentally strong pharma stocks Pfizer Inc. (PFE), AstraZeneca PLC (AZN), Bristol-Myers Squibb Company (BMY), and Zoetis Inc. (ZTS) might be ideal buys in 2023. Also, these companies pay stable dividends.
Pfizer Inc. (PFE)
PFE discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. It offers medicines and vaccines in various therapeutic areas.
On February 16, PFE announced positive results from the Phase 3 TALAPRO-2 study of TALZENNA, an oral poly ADP-ribose polymerase inhibitor, in combination with XTANDI, demonstrating a statistically significant and clinically meaningful improvement in radiographic progression-free survival.
In addition, the U.S. Food and Drug Administration (FDA) has also granted a Priority Review for Pfizer’s supplemental new drug application for TALZENNA in combination with XTANDI.
On December 9, 2022, PFE announced a quarterly dividend of $0.41 per share, payable on March 3, 2023.
PFE pays $1.64 annually as dividends. This translates to a yield of 3.80% at the current price, compared to the 4-year average dividend yield of 3.73%. Its dividend payments have grown at a CAGR of 5.5% over the past five years.
PFE’s total revenue increased 1.9% year-over-year to $24.29 billion in the fourth quarter, which ended December 31, 2022. The company’s adjusted income increased 44.2% year-over-year to $6.55 billion, while its adjusted EPS rose 44.3% year-over-year to $1.14.
Analysts expect PFE’s revenue for the current quarter ending March 2023 to be $17.18 billion. The company’s EPS for the same quarter is expected to be $1.05. Additionally, it has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained marginally intraday to close the last trading session at $43.21.
PFE’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
PFE also has an A grade for Value and a B for Quality. It is ranked #25 among 174 stocks in the Medical – Pharmaceuticals industry.
To access additional ratings for PFE for Growth, Momentum, Stability, and Sentiment, click here.
AstraZeneca PLC (AZN)
Headquartered in Cambridge, United Kingdom. AZN specializes in researching, developing, producing, and commercializing prescription medicines. The company also helps general practitioners and specialists worldwide through distributors and regional representative offices.
On February 2, AZN and Amgen Inc.(AMGN)’s TEZSPIRE was approved in the US for self-administration in a pre-filled, single-use pen for patients aged 12 years and older with severe asthma. TEZSPIRE is the only biologic approved for severe asthma with no phenotype or biomarker limitation within its approved label.1
Kenneth Mendez, President and CEO of the Asthma and Allergy Foundation of America, said, “Severe asthma continues to be a very complex condition to manage, so we welcome the TEZSPIRE pre-filled pen as an option that will empower patients and healthcare providers with increased choice. We believe self-administration alternatives can play an important role in patients’ lives and address unmet needs for those with severe asthma.”
On January 9, 2023, AZN entered into a definitive agreement to acquire CinCor Pharma, Inc., a US-based clinical-stage biopharmaceutical company focused on developing novel treatments for resistant and uncontrolled hypertension and chronic kidney disease. The transaction is expected to close in the first quarter of 2023 and boost the company’s bottom line.
On February 9, AZN announced a quarterly dividend of $0.99 per share, payable on March 27, 2023.
AZN pays a $1.97 per share dividend annually, which translates to a 2.86% yield on the current price. Its dividend payments have grown at a CAGR of 1.2% over the past three years. The company has a four-year average dividend yield of 2.67%.
For the fiscal 2022 fourth quarter ended December 31, 2022, AZN’s gross profit increased 12.5% year-over-year to $8.31 billion. Its profit for the period came in at $778 million, compared to a loss of $636 million in the previous-year quarter. Also, its earnings per $0.25 ordinary share came in at $0.58, compared to a loss per share of $0.22 in the previous-year quarter.
AZN’s revenue is expected to rise 3.9% year-over-year to $46.07 billion for the fiscal year ending December 2023. The company’s EPS for the same year is expected to increase 39.6% year-over-year to $4.65.
Shares of AZN have gained 13.1% over the past year to close the last trading session at $68.97.
AZN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
The stock has a B grade for Growth, Quality, and Stability. Within the same industry, it is ranked #9.
Beyond what is stated above, we’ve also rated AZN for Value, Sentiment, and Momentum. Get all AZN ratings here.
Bristol-Myers Squibb Company (BMY)
BMY discovers, develops, licenses, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. It offers products for hematology, oncology, cardiovascular, immunology, fibrotic, and neuroscience diseases.
On February 17, BMY announced three-year follow-up results from the Phase 3 CheckMate -274 trial, demonstrating significant, sustained clinical benefits with Opdivo (nivolumab) for the adjuvant treatment of patients with surgically resected, high-risk muscle-invasive urothelial carcinoma.
Matthew D. Galsky, M.D., Professor of Medicine, Director of Genitourinary Medical Oncology, Associate Director for Translational Research, said, “Nivolumab remains the only immunotherapy, as well as the only medical treatment in general, to decrease the risk of urothelial cancer recurrence after radical surgery in patients who received chemotherapy before surgery or who are ineligible for chemotherapy.”
BMY pays $2.28 annually as dividends. This translates to a yield of 3.21% at the current price, higher than the 4-year average dividend yield of 3.02%. Its dividend payments have grown at a CAGR of 9.2% and 6.9% over the past three and five years, respectively.
During the fiscal fourth quarter that ended December 31, 2022, BMY’s total revenue in the US increased 5.4% year-over-year to 7.93 billion. The company’s total expenses decreased 5.7% year-over-year to $9.55 billion, and its non-GAAP EPS stood at $1.82.
BMY’s revenue is expected to rise 1.7% year-over-year to $46.94 billion for the fiscal year 2023. The company’s EPS is expected to rise 4.2% year-over-year to $8.02 for the same fiscal year. Additionally, the stock has topped consensus EPS and revenue estimates in the trailing four quarters.
BMY’s shares have gained 5.5% over the past year to close its last trading session at $71.11.
It’s no surprise that BMY has an overall A rating, which equates to a Strong Buy in our POWR Ratings system.
BMY has an A grade for Value and a B for Growth, Sentiment, Stability, and Quality. The stock is ranked #2 in the same industry.
Click here to access BMY’s grades for Momentum.
Zoetis Inc. (ZTS)
ZTS is engaged in discovering, developing, and manufacturing animal health medicines, vaccines, and diagnostic products in the United States and internationally. Its target market primarily includes livestock producers, veterinarians, and retail outlets.
On February 8, ZTS announced a quarterly dividend of $0.38 per share, payable on June 1, 2023.
ZTS pays a $1.50 per share dividend annually, translating to a 0.87% yield on the current price. Its dividend payments have grown at a CAGR of 25% over the past three years.
ZTS revenue rose 3.7% year-over-year to $2.04 billion in the fourth quarter that ended December 31, 2022. Adjusted net income attributable to ZTS increased 13.7% year-over-year to $539 million, while adjusted EPS attributable to ZTS increased 15% year-over-year to $1.15.
Street EPS estimate for the fiscal year 2023 of $5.40 reflects a rise of 10.7% year-over-year. Its revenue estimate for the same year of $8.62 billion indicates an improvement of 6.7% from the prior-year quarter. Additionally, ZTS has topped consensus revenue estimates in three of the trailing four quarters.
The stock has gained 19.8% over the past three months to close the last trading session at $172.03.
ZTS’ robust prospect is reflected in its POWR Ratings. The stock has an overall B rating, equating to Buy in our proprietary rating system.
ZTS has an A grade for Quality and a B for Stability. It is ranked #20 in the same industry.
Click here for the additional POWR Ratings for ZTS (Growth, Value, Momentum, and Sentiment).
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PFE shares were trading at $43.21 per share on Monday morning, up $0.26 (+0.61%). Year-to-date, PFE has declined -14.90%, versus a 6.49% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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