Pharmaceutical stocks often reward investors with dividends and growth, but they have risks. Drugs can fail to win the approval of the Food and Drug Administration, patents expire and competing drugs may drive an old standby out of the market.
When investing in the pharmaceutical sector, it can be important to look for companies that have a firm hold on a narrow market. This can often be found from established large-cap drug manufacturers in the market, but smaller companies are also emerging with new discoveries as well. Many successful pharmaceutical companies focus on specific types of diseases and disorders, so they can become the go-to source for doctors treating those conditions.
We have selected four companies that are in an uptrend with increasing revenue, net income and earnings per share over the past year. These companies have a steady market for their products with established distribution channels. All figures are as of December 22, 2017.
Supernus Pharmaceuticals (SUPN) has reported a year-to-date (YTD) gain of 53.07% through December 22, 2017. The company has one-year revenue growth of 45.8%, one-year net income growth of 554.25% and one-year earnings per share growth of 528.6%.
The company specializes in drugs for treating diseases of the nervous system. This includes epilepsy, attention deficit disorder and depression. The stock is trading at $38.55. Analysts have a one-year target price for the stock of $50.13. Sales estimates for 2018 are projected to increase by 32%. Analysts are also projecting a 50% increase in earnings per share for 2018.
Johnson & Johnson
Johnson & Johnson (JNJ) has reported a YTD gain of 25.32%. The company has one-year revenue growth of 2.59%, one-year net income growth of 7.34% and one-year earnings per share growth of 8.21%.
JNJ is a healthcare conglomerate with drug research and manufacturing developed from its pharma division which focuses on drugs for immunology, infectious diseases, neuroscience, oncology, and cardiovascular and metabolic diseases. It also operates consumer and medical device units.
The stock is trading at $141. The company has one of the largest market caps in the sector at $378.8 billion. Target prices for the stock are ranging from $146 to $165. Sales estimates are projecting growth of 9% in 2018. Earnings per share are also estimated to gain approximately 13% to $8.23 in 2018.
Pfizer (PFE) is another large-cap stock on an uptrend through 2017. The company reported a YTD gain of 15.52%. It has one-year revenue growth of 8.13%, one-year net income growth of 3.66% and one-year earnings per share growth of 5.41%.
Pfizer focuses on global biopharmaceutical research and drug manufacturing. The stock is trading at $36.28. Projections for the stock range from $38 to $54. Revenue is expected to increase to $55 billion in 2018 from an estimated $52.5 billion in 2017. Earnings per share are also projected higher in 2018, with estimates at $2.85, increasing from $2.63 in 2017.
In 2017, Bristol-Myers Squibb (BMY) showed significant gains. Its stock increased 7.91% YTD through December 22, 2017. One-year revenue growth was 17.31%, net income increased 184.8% for the year and earnings per share gained 185.0%.
The company is focused on biopharmaceutical products. In the fourth quarter of 2017 it reported a number of new developments. Of primary focus was the company’s FDA approvals for Opdivo and Yervoy which seek to treat melanoma.
The stock is trading at $61.37. Analysts have a target price of $63 to $75. Revenue is expected to increase from $20 billion in 2017 to $23 billion in 2018. Earnings per share are also project higher at $3.67 increasing form $3.06.
The Bottom Line
Big pharma showed some strong gains in 2017. Across the sector all companies appear set to gain from lower corporate taxes which are likely to help the entire drug manufacturing sector in research and development. These four companies have been on an uptrend in 2017 with momentum expected to carry over into 2018.