With stock markets down right now, shares of some value stocks can be bargains. In a shaky economy, stocks of companies that make products that are necessities can be smart choices for value investors. Phamaceutical stocks can fall into that category.
Two global pharmaceutical stocks, AbbVie Inc. (ABBV, Financial) and Pfizer Inc. (PFE, Financial), are both rated stocks to buy or hold. Information about these two companies can help you decide if either are the prescription for profits for your value portfolio.
AbbVie
Abbvie (ABBV, Financial) will lose exclusivity of its top-selling drug Humira in 2023, which is no small risk since it accounted for about 37% of total revenue in 2021. However, the drugs Skyrizi and Rinvoq are expected to have combined sales of more than $15 billion by 2025. The company is also making strides in treatments for blood cancers.
Investors might be interested in AbbVie for its 3.54% dividend yield as it could be a strong rung in a dividend ladder.
AbbVie has a price-earnings ratio of 21.88, showing it is slightly overvalued. The company's GF Score is 88 out of 100, getting high marks for growth and profitability. However, it is in the danger zone for financial strength, which should give value investors pause.
Shares of AbbVie were trading at $152.46 on July 12, down from its 52-week high of $175.91.
Pfizer
Known for its development of an mRNA vaccine against Covid-19 with partner BioNTech SE (BNTX, Financial), Pfizer (PFE, Financial) may rise in value thanks to the successful launch of the Covid antiviral treatment Paxlovid as well as its vaccine being approved for children between six months to four years old and possible boosters being available for all adults this fall.
Pfizer has a GF Score of 89 out of 100 and its price-earnings ratio is 11.92, a strong signal that Pfizer is undervalued. The pharmaceutical company has a strong history of profitability, showing profits each year for the past decade.
Rated a buy and hold, Pfizer has divested itself from its off-patent division, an area that is not nearly as profitable as drugs that are exclusive to it. Still, the company faces competition on drugs such as Prevnar, since Merck & Co. Inc. (MRK, Financial) has its own pneumococcal vaccine.
Pfizer was trading at $52.04 of July 12, off from its 52-week high of $61.71.
The bottom line
If you are looking to choose either of these global pharmaceutical companies, Pfizer may be the choice best suited to value investing currently.
