3 Pharmaceutical Stocks to Buy for the Long-Term

Despite the current global logistical gridlock, the pharmaceutical industry has generated significant revenues across various diagnostics, research, and healthcare segments over the past year. With the emergence of new COVID-19 variants causing an occasional surge of cases, and with a rise in chronic ailments worldwide, the pharma industry is projected to expand. Furthermore, the increasing medical needs of an aging population and consistent innovations from the sector should drive the industry’s long-term growth.

Increasing rates of pharma business collaborations, accurate digitized diagnoses, and an increasing volume of bio-medical trials are set to contribute to the global pharma industry’s growth. According to a ResearchAndMarkets report, the global pharmaceutical manufacturing market is expected to reach $813.31 billion in 2026, growing at a 12.3% CAGR of 12.3%.

So, considering these factors, we think it could be wise to bet on quality pharmaceutical stocks Johnson & Johnson (JNJ), Pfizer Inc. (PFE), and Teva Pharmaceutical Industries Limited (TEVA) to cash in on the industry’s long-term growth.

Johnson & Johnson (JNJ)

New Brunswick, N.J.-based JNJ researches, develops, manufactures, and sells a range of products in the healthcare field worldwide. It operates through three segments: Consumer Health; Pharmaceutical; and Medical Devices.

On Nov. 10, 2021, JNJ agreed with the U.S. Government and Gavi to deliver its single-shot COVID-19 vaccine, the COVAX Humanitarian Buffer. Paul Stoffels, M.D., Vice Chairman of the Executive Committee and Chief Scientific Officer, said, “We believe our single-shot COVID-19 vaccine has a critical role to play in conflict zones and other humanitarian settings that can't be reached by government vaccination campaigns, and we are proud to be part of this effort to protect the world's most vulnerable people.”

JNJ’s sales have increased 10.7% year-over-year to $23.34 billion in its fiscal 2021 third quarter. Its gross profit came in at $16.09 billion, up 14% year-over-year. And its non-GAAP net earnings were $3.67 billion, up 3.2% year-over-year. Also, its non-GAAP EPS came in at $2.60, up 18.2% year-over-year.

Analysts expect JNJ’s revenue and EPS to increase 3.8% and 5.8%, respectively, year-over-year to $97.88 billion and $10.37in fiscal 2022. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 1.8% in price to close yesterday’s session at $165.25.

JNJ’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

JNJ has a B grade for Growth, Value, Stability, Sentiment, and Quality. Within the Medical - Pharmaceuticals industry, it is ranked #1 of 188 stocks. Click here to see the additional POWR Ratings for Momentum.

Pfizer Inc. (PFE)

Leading biopharmaceutical company PFE in New York City offers medicines and vaccines in various therapeutic areas, including cardiovascular, metabolic, pain, biologics, small molecules, and immunotherapies.

On December 8, PFE and BNTX announced that a three-shot course of their COVID-19 vaccine could neutralize the new omicron variant in a laboratory test in an early signal that booster shots could be crucial protection against infection from the variant.

PFE’s revenues increased 134.4% year-over-year to $24.09 billion for the fiscal third quarter, ended Sept.30, 2021. While its adjusted income increased 132.7% year-over-year to $7.69 billion, its adjusted EPS came in at $1.34, up 127.1% year-over-year.

Analysts expect PFE’s revenue to increase 19.7% year-over-year to $882.94 billion for its fiscal year 2022. In addition, its EPS is also expected to grow 38.8% year-over-year to $52.71 in fiscal 2022. Over the past year, the stock has gained 48.1% in price to close yesterday’s trading session at $54.05.

PFE has an overall A rating, which indicates a Strong Buy in our proprietary rating system. It has an A grade for Growth and a B grade for Value and Quality. Within the Medical - Pharmaceuticals industry, it is ranked #9. Click here to see the additional POWR Ratings for Momentum, Stability, and Sentiment for PFE.

Teva Pharmaceutical Industries Limited (TEVA)

Based in Tel Aviv-Yafo, Israel, TEVA is a pharmaceutical company that develops, manufactures, markets, and distributes generic medicines, specialty medicines, and biopharmaceutical products in North America, Europe, and internationally.

On November 25, Quantum Genomics announced an exclusive license agreement with TEVA subsidiary, Teva Israel Ltd., to market firibastat in Israel. This collaboration could help increase the company’s revenue.

For the third quarter, ended Sept. 30, 2021, TEVA’s Generic products revenue for its European segment came in at $895 million, up 8.6% year-over-year. Its non-GAAP net income was $651 million, up 2.2% year-over-year. Furthermore, its non-GAAP EPS increased 1.7% year-over-year to $0.59.

TEVA’s revenue is expected to come in at $16.32 billion in fiscal 2022. Its EPS is expected to increase 4.4% year-over-year to $2.63 for its fiscal 2022. Over the past month, the stock has gained 7.6% in price to close yesterday’s trading session at $8.64.

Under POWR Ratings, TEVA has been accorded an A grade for Value and a B grade for Growth. The stock is ranked #35 in the Medical - Pharmaceuticals industry. Click here to see the additional POWR Ratings for TEVA (Stability, Momentum, Sentiment, and Quality).

Click here to checkout our Healthcare Sector Report

JNJ shares were trading at $166.79 per share on Friday morning, up $1.54 (+0.93%). Year-to-date, JNJ has declined -2.50%, versus a -5.85% rise in the benchmark S&P 500 index during the same period.

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.

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