After being thrust into the limelight during the Covid-19 pandemic, the medical-pharmaceutical industry continues to witness solid growth, thanks to the high demand for its products irrespective of the economic cycle.
Pharmaceutical companies are known to maintain their profit margins even during economic downturns due to the nature of their businesses. With a recession expected by the end of the year, it could be wise to buy fundamentally strong pharmaceutical stock AbbVie Inc. (ABBV). On the other hand, Catalyst Pharmaceuticals, Inc. (CPRX) could be added to one’s watchlist.
The increasing prevalence of chronic disease and a rapidly aging population are some of the key factors fuelling the growth of the pharmaceutical industry. The revenue in the worldwide pharmaceuticals market is expected to grow at a compounded annual growth rate (CAGR) of 5.4%, to reach $1.44 trillion by 2027.
Investors’ interest in the pharmaceutical industry is evident from the VanEck Vectors Pharmaceutical ETF’s (PPH) 4.1% return over the past nine months.
Let’s take a closer look at their fundamentals.
Stock to Buy:
AbbVie Inc. (ABBV)
ABBV discovers, develops, manufactures, and sells pharmaceuticals worldwide. The company offers a wide range of therapies in the areas of immunology, oncology, neuroscience, eye care, virology, and gastroenterology.
On May 19, 2023, The U.S. Food and Drug Administration approved ABBV and Danish drugmaker Genmab's blood cancer therapy, epcoritamab, for adult patients who have received at least two prior lines of treatment. The therapy, epcoritamab, will be sold under the brand name Epkinly, which treats a type of advanced large B-cell lymphoma. The approval expands ABBV’s product pipeline.
In terms of the trailing-12-month gross profit margin, ABBV’s 70.96% is 27.2% higher than the 55.78% industry average. Its 52.03% trailing-12-month EBITDA margin is significantly higher than the 2.06% industry average. Likewise, its 0.41x trailing-12-month asset turnover ratio is 16.2% higher than the industry average of 0.35x.
For the fiscal first quarter ended March 31, 2023, ABBV’s net revenues came in at $12.23 billion. The company’s non-GAAP after-tax earnings came in at $4.39 billion, while its non-GAAP EPS came in at $2.46.
ABBV’s EPS for fiscal 2024 is expected to increase 1% year-over-year to $11.11. It has an impressive earnings surprise history, surpassing its consensus EPS estimates in three of the trailing four quarters. Over the past nine months, the stock has gained marginally to close the last trading session at $137.63.
ABBV’s POWR Ratings reflect its solid prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Within the Medical - Pharmaceuticals industry, it is ranked #3 out of 167 stocks. The company has an A grade for Quality and a B for Growth, Value, Momentum, Stability, and Sentiment.
Click here to access all the POWR Ratings of ABBV.
Stock to Watch:
Catalyst Pharmaceuticals, Inc. (CPRX)
CPRX, a commercial-stage biopharmaceutical company, focuses on developing and commercializing therapies for people with rare debilitating, chronic neuromuscular, and neurological diseases in the United States. It offers Firdapse for the treatment of patients with lambert-eaton myasthenic syndrome (LEMS), and Ruzurgi for the treatment of pediatric LEMS patients.
In terms of the trailing-12-month gross profit margin, CPRX’s 77.23% is 38.5% higher than the 55.78% industry average. Its 49.86% trailing-12-month EBITDA margin is considerably higher than the 2.06% industry average. Likewise, its 0.04% trailing-12-month Capex/Sales ratio is 99.1% lower than the industry average of 4.63%.
CPRX’s total revenues increased 98.1% year-over-year to $85.37 million for the quarter that ended March 31, 2023. The company’s operating income increased 105.1% year-over-year to $35.61 million. Its non-GAAP net income increased 141.3% year-over-year to $46.81 million.
Additionally, its non-GAAP EPS came in at $0.41, representing a 127.8% increase over the prior-year quarter. Its total current assets came in at $198.91 million, compared to current assets of $320.81 million for the fiscal year ended December 31, 2022.
CPRX’s EPS and revenue for the quarter ending June 30, 2023, are expected to increase 41% and 76.7% year-over-year to $0.28 and $93.85 million, respectively. It has a commendable earnings surprise history, surpassing its consensus EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 63.8% to close the last trading session at $11.50.
CPRX’s POWR Ratings are consistent with this mixed outlook. It is ranked #43 in the same industry. It has a C grade for Growth.
We have also given CPRX grades for Value, Momentum, Stability, Sentiment, and Quality. Get all CPRX ratings here.
What To Do Next?
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ABBV shares were trading at $136.46 per share on Tuesday afternoon, down $1.10 (-0.80%). Year-to-date, ABBV has declined -13.98%, versus a 10.25% rise in the benchmark S&P 500 index during the same period.
About the Author: Malaika Alphonsus
Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions.
The post AbbVie (ABBV) and Catalyst Pharmaceuticals (CPRX): Analyzing Investment Potential appeared first on StockNews.com