Top Pharmaceutical Stocks for Q2 2022

IRWD, DVAX, and AMPH are top for value, growth, and momentum, respectively

The pharmaceutical industry is made up of companies that research, develop, make, and sell drugs and treatments used to treat or eradicate diseases and vaccinate people. This includes some of the largest and best-known companies in the world, such as Pfizer Inc. (PFE), Merck & Co. Inc. (MRK), and AbbVie Inc. (ABBV). A number of pharmaceutical companies, including Pfizer, have seen a surge in their sales after winning approval from U.S. and foreign governments for vaccines aimed at preventing the COVID-19 virus.

Over the past 12 months, pharmaceutical stocks, based on the iShares U.S. Pharmaceuticals ETF (IHE), have slightly outperformed the overall market. IHE's total return over the period was 5.6% compared to the Russell 1000's total return of 4.5%. These market performance figures and all statistics in the tables below are as of March 14, 2022.

Here are the top three pharmaceutical stocks with the best value, the fastest growth, and the most momentum.

Best Value Pharmaceutical Stocks

These are the pharmaceutical stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.

Best Value Pharmaceutical Stocks
  Price ($) Market Cap ($B) 12-Month Trailing P/E Ratio
Ironwood Pharmaceuticals Inc. (IRWD) 11.64 1.9 3.6
Organon & Co. (OGN) 32.36 8.2 6.1
Novartis AG (NVS) 84.07 187.9 8.0

Source: YCharts

  • Ironwood Pharmaceuticals Inc.: Ironwood Pharmaceuticals develops and manufactures drugs that treat gastrointestinal and cardiovascular diseases.
  • Organon & Co.: Organon is a global women's healthcare company that develops and produces medicines and other products across a range of areas, including reproductive health, heart disease, dermatology, allergies, and asthma. In mid-February, Organon announced that it had acquired the rights from Bayer AG to Marvelon and Mercilon, combined oral hormonal daily contraceptive pills, in the People’s Republic of China, including Hong Kong and Macau. Organon has also entered into an agreement to acquire the rights to these products in Vietnam. This gives Organon full global ownership of these brands, except in South Korea.
  • Novartis AG: Novartis is a Switzerland-based maker of pharmaceutical and consumer healthcare products. It develops and creates branded and generic prescription drugs, active pharmaceutical ingredients (APIs), and related products. Its products are used as in the treatment of diseases in the areas of cancer, dermatology, ophthalmology, neuroscience, immunology, and more. On March 14, Novartis announced that its Sandoz division acquired Coalesce Product Development Ltd, a U.K.-based medical and drug delivery device development company. The acquisition is expected to boost Sandoz's offerings in the areas of respiratory medicine and complex genetics. Terms of the acquisition were not disclosed in the announcement.

Fastest-Growing Pharmaceutical Stocks

These are the top pharmaceutical stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.

Fastest-Growing Pharmaceutical Stocks
  Price ($) Market Cap ($B) EPS Growth (%) Revenue Growth (%)
Dynavax Technologies Corp. (DVAX) 10.25 1.3 N/A (see company description) 897.8
Aerie Pharmaceuticals Inc. (AERI) 8.26 0.4 N/A (see company description) 364.6
Verano Holdings Corp. (VRNOF) 8.98 1.8 -46.4 221.4

Source: YCharts

  • Dynavax Technologies Corp.: Dynavax Technologies is a biopharmaceutical company specializing in developing immunotherapy treatments. It develops and commercializes novel vaccines and is collaborating with other biopharmaceutical companies to develop vaccines to treat COVID-19. Dynavax reported net income for Q4 2021, ended Dec. 31, compared with net loss for the prior-year quarter. Revenue soared by nearly nine-fold year-over-year. Because Dynavax went from negative to positive EPS for the period in question, it does not have an EPS growth figure in the table above.
  • Aerie Pharmaceuticals Inc.: Aerie Pharmaceuticals is a clinical-stage pharmaceutical company. it discover, develops, and markets products for the treatment of eye diseases including glaucoma. Aerie had negative EPS for the most recent quarter, making an EPS growth calculation impossible.
  • Verano Holdings Corp.: Verano Holdings is a vertically integrated, multistate cannabis operator. The company produces a wide range of medical and adult-use cannabis products, which it sells through its portfolio of brands, including: Verano, Avexia, Encore, and MÜV. In early February, Verano announced plans to acquire Goodness Growth Holdings Inc., a holding company whose subsidiaries include Vireo Health, a multistate cannabis company, and Resurgent Biosciences Inc., a science and intellectual property incubator. The deal gives Verano Holdings access to the New York, New Mexico, and Minnesota markets. The all-share transaction is valued at approximately $413 million.

Pharmaceutical Stocks With the Most Momentum

These are the pharmaceutical stocks that had the highest total return over the past 12 months.

Pharmaceutical Stocks With the Most Momentum
  Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
Amphastar Pharmaceuticals Inc. (AMPH) 34.81 1.7 79.8
Intra-Cellular Therapies Inc. (ITCI) 56.93 5.3 44.8
Pfizer Inc. (PFE) 52.25 293.8 54.9
Russell 1000 N/A N/A 4.5
iShares U.S. Pharmaceuticals ETF (IHE) N/A N/A 5.6

Source: YCharts

  • Amphastar Pharmaceuticals Inc.: Amphastar Pharmaceuticals is a biopharmaceutical company that develops, manufactures, and sells generic and injectable, inhalation, and intranasal products. It also sells an insulin-active pharmaceutical ingredient.
  • Intra-Cellular Therapies Inc.: Intra-Cellular Therapies is a company that researches and develops biopharmaceutical products. It develops drugs to treat neurological and neuropsychiatric diseases of the central nervous system.
  • Pfizer Inc.: Pfizer is a multinational pharmaceutical and biotechnology company. It researches, develops, and manufactures biopharmaceutical products across a range of different areas, including oncology, cardiovascular disease, inflammatory diseases, immunology, rare diseases, and vaccines. On March 15, Pfizer and BioNTech SE (BNTX) submitted an application to the U.S. Food and Drug Administration (FDA) for Emergency Use Authorization (EUA) of an second booster dose for adults 65 years of age and older who have received an initial booster of any of the authorized or approved COVID-19 vaccines. The application is based on data showing evidence that an additional mRNA booster increases immunogenicity and lowers rates of confirmed infections and severe illness.

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  1. YCharts. "Financial Data."

  2. Organon & Co. "Organon Acquires Contraceptive Products, Marvelon® and Mercilon®, in the People’s Republic of China, including Hong Kong and Macau, and Agrees to Acquire these Products in Vietnam."

  3. Novartis AG. "Sandoz targets growth opportunities in respiratory and complex generics through acquisition of respiratory device company Coalesce."

  4. Dynavax Technologies Corp. "Dynavax Reports Fourth Quarter and Full Year 2021 Financial Results and Provides Full Year 2022 Financial Guidance."

  5. Verano Holdings Corp. "VERANO TO ENTER COVETED NEW YORK, MINNESOTA AND NEW MEXICO MARKETS WITH PROPOSED ACQUISITION OF GOODNESS GROWTH HOLDINGS."

  6. Pfizer Inc. "Pfizer and BioNTech Submit for U.S. Emergency Use Authorization of an Additional Booster Dose of their COVID-19 Vaccine for Older Adults."

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