3 Mega-Cap Pharmaceutical Stocks to Buy and Hold

Though volatility in the market has led to the fall in the prices of many pharma stocks, the long-term prospects of the sector look bright. The sector is attracting massive investments and may remain in the limelight in the near term. Therefore, we think the mega-cap pharmaceutical stock would be better suited for Merck & Company (MRK), Roche Holding AG (RHHBY), and AbbVie Inc. It should be wise to buy and hold (ABBV) that are undervalued at their current price levels.

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The solid pace of technological development in the healthcare industry has fueled digital healthcare practices, cyber security, patient data transparency, remote patient monitoring (RPM), and various customer-centric and operational enhancements. Healthcare players are steadily expanding digital health, and the sector has become a hotspot for investors. according to McKinseyInvestments in US digital therapeutic companies have increased by nearly 40% annually over the past seven years.

With one in four American adults suffering from a chronic disease, the industry is expected to grow as the population grows. Global pharmaceuticals market expected to reach $2.14 trillion in 2026 at a CAGR of 7.7%While health spending is expected to exceed $4 trillion in 2020 $8.30 trillion by 2040,

The turmoil in the market has led to a sharp fall in the prices of many pharma stocks this year. However, we think the financially strong mega-cap stock, Merck & Company, Inc. ,MRK), Roche Holding AG (RHHBY), and AbbVie Inc. ,abbv), which is currently trading at a discount, could be an ideal buy and hold option.

Merck & Company, Inc. ,MRK,

MRK operates as a worldwide healthcare company through two segments, Pharmaceutical and Animal Health. Its market cap is $213.68 billion.

On June 13, MRK announced that the US FDA had accepted a new Supplemental Biologics License Application (SBLA) for review for patients with stage IB (≥4 cm), II or IIIA non-small cell lung disease. Is seeking approval for KEYTRUDA for adjuvant treatment. Cancer (NSCLC) after complete surgery. If approved, KEYTRUDA will be the first adjuvant immunotherapy-based option in the US. “The acceptance of our application reflects the progress made in our oncology portfolio in the first lines and earlier stages of certain cancers,” said Dr. Eliav Barr, senior VP, head of global clinical development and chief medical officer of Merck Research Laboratories.

MRK’s sales grew 49.6% from the prior-year quarter to $15.90 billion in the first quarter of the fiscal year ended March 31, 2022. Its net income came in at $4.31 billion, reflecting a 57% year-over-year increase, while its EPS stood. At $1.70, up 57.4% year-over-year.

MRK’s revenue for the fiscal quarter ending June 2022 is expected to come in at $13.60 billion, indicating a growth of 19.3% year-over-year. The company’s EPS is expected to rise 28.9% from a year ago price to $1.69. MRK also outperformed consensus EPS estimates in three of the last four quarters.

Further in terms of price/sales, MRK is currently trading at 3.69x, which is 9.5% lower than the industry average of 4.08x. after this EV/EBITDA The multiplier of 9.89 is 21.3% lower than the industry average of 12.6.

MRK’s stock is up 12% over the past year and 10.3% year-on-year and closed its last trading session at $84.50.

MRK’s strong fundamentals are reflected in its power rating, The stock has an overall rating of A, which translated to strong buys in our POWR rating system. The POWR rating is calculated by considering 118 different factors, each factor weighted to an optimum degree.

The company also has an A grade in growth and a B in stability, sentiment, value and quality. It is ranked #1 out of 168 stocks Medicine – Pharmaceuticals industry. To get the rating of MRK for Momentum, click here,

Roche Holding AG (RHHBY,

RHHBY is a healthcare company based in Switzerland. The company’s operational businesses are organized into two divisions: pharmaceuticals and diagnostics. The pharmaceuticals division consists of two business segments, Roche Pharmaceuticals; and Chugai, while the Diagnostics Division comprises four business segments Diabetes Care; molecular diagnostics; professional diagnosis; and tissue diagnosis. The company’s market capitalization is $271.63 billion.

On June 9, RHHBY announced that the US FDA has approved Foundation Medicine’s FoundationOne®CDx as a companion diagnostic (CDx) for Roche’s Rozlytrek® (entrectinib). FoundationOne CDx can now be used to identify patients with ROS1 fusion-positive non-small cell lung cancer or patients with NTRK fusion-positive solid tumors for whom treatment with Rozlytrek may be appropriate. This approval is the first and only companion clinical indication for Rozlytrek and an important milestone in a tumor-agnostic approach to people living with rare cancers.

The company also announced that the European Commission had approved Tecentriq® (atezolizumab) as an adjunctive treatment for adults with non-small cell lung cancer (NSCLC) at high risk of recurrence. In a Phase III trial, Adjuvant Techcentric reduced the risk of disease recurrence or death by 57% compared to best supportive care. Tecentriq is now the first and only cancer immunotherapy available in Europe for people with early-stage NSCLC, a milestone for the company.

RHHBY’s group sales grew 10.1% year-on-year to CHF16.45 billion ($16.49 billion) for the fiscal quarter ended March 31, 2022, while its sales from the pharmaceuticals division grew 5.3% year-on-year to CHF11.16 billion. happened. ($11.19 billion).

Consensus revenue estimates of $64.48 billion for the fiscal year ending December 2023 represent a 1.2% improvement year-over-year. The EPS estimate of $2.81 for the same period represents an increase of 7.5% year-over-year. In each of the last four quarters, the company topped the Street EPS estimates.

In terms of its forward P/E, RHHBY is currently trading at 13.78x, 43.5% lower than the industry average of 24.36x. Its forward EV/EBITDA multiple is 9.89, which is 21.3% lower than the industry average of 12.6.

RHHBY is down 3.8% over the past month to close the previous trading session at $38.21.

RHHBY’s power rating reflects this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system.

RHHBY also has a B grade in consistency, price and quality. It is ranked #18 in the same industry. To view additional power ratings for Momentum, Growth and Sentiment for RHHBY, click click here,

AbbVie Inc. ,abbv,

With a market capitalization of $243.19 billion, ABBV is a research-based biopharmaceutical company engaged in research and development, manufacturing, commercialization and sales of drugs and therapies.

This month, ABBV announced primary results from the Large B-cell Lymphoma (LBCL) Expansion Group evaluating epcoritamab (DuoBody) in the EPCORE™ NHL-1 Phase 2 clinical trial.-CD3xCD20), a detectable subcutaneous bispecific antibody. Results showed clinically meaningful efficacy with durable response in patients.

The company also announced new data from Cohort 3 of its Phase 2 Refine study in combination with ruxolitinib in JAK inhibitor nave patients with myelofibrosis (MF), a rare and difficult to treat blood cancer. Preliminary findings showed splenic volume and symptomatic improvement in this group, which is expected to help the company explore disease modification and treatment avenues.

ABBV’s net revenue in the first quarter of 2022 increased 4.1% from the prior-year quarter to $13.54 billion. Operating income for the quarter came in at $4.72 billion, representing a 15% year-over-year increase, while net earnings were up 26.4% year-over-year to $4.49 billion due to ABBV. The company’s EPS rose 26.1% year-over-year to $2.51.

The consensus EPS estimate of $3.43 for the fiscal second quarter ending June 2022 represents a year-over-year improvement of 10.4%. Consensus revenue estimates of $14.7 billion for the same quarter represent an increase of 4.9% compared to the same period last year. It has an impressive earnings surprise history, as it has topped Street EPS estimates in each of the past four quarters.

In terms of its forward EV/EBITDA, ABBV is currently trading at 9.85x, 21.6% lower than the industry average of 12.56x. Its forward price/cash flow multiple of 9.66 is 37% lower than the industry average of 15.34.

Over the past year, the stock has gained 19.3% and 29.2% over the past nine months. It closed the previous trading session at $137.62.

It should come as no surprise that ABBV has an overall rating of A, which equates to a strong buy in our power rating system. ABBV also has an A grade in quality and a B in development and value. Stock is ranked #7 in the Medical – Pharmaceuticals industry.

In addition to the PoWR rating grades that I just highlighted, you can view ABBV’s ratings for momentum, stability, and sentiment. Here,

Shares of MRK were trading at $83.67 per share, down by $0.96 (-1.13%) on Thursday morning. Year-on-year, MRK has gained 11.05%, compared to a gain of -22.27% in the benchmark S&P 500 index during the same period.

About the Author: Komal Bhattari

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Komal’s passion for the stock market and financial analysis inspired her to pursue investment research as a career. His fundamental approach to analyzing stocks helps investors identify the best investment opportunities.


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