Because the COVID-19 pandemic is under control in most major economies, the hype surrounding vaccine producers is gradually tapering off. However, because the population of much of the world, including the United States, is aging, the demand for pharmaceutical products is on the rise. An increasing patient pool with various chronic diseases, and continued treatment innovations for critical diseases, should keep driving the industry’s growth this year and beyond. According to…
a report by Research and Markets, the global pharmaceuticals market is expected to grow at an 8% CAGR from 2021 – 2025.
Investors’ interest in the pharmaceutical space is evident in the SPDR S&P Pharmaceuticals ETF’s (XPH) 4.6% returns over the past month versus the SPDR S&P 500 Trust ETF’s (SPY) 1.3% gains over this period.
With these factors in mind, we think it could be wise to bet on the shares of established pharmaceutical companies Johnson & Johnson (JNJ – Get Rating) and Pfizer Inc. (PFE – Get Rating). They have significant market dominance and are innovating at a rapid pace. But while these stocks are still trading at high prices, one should seek to buy them on every dip.
Click here to checkout our Healthcare Sector Report for 2021
Johnson & Johnson (JNJ – Get Rating)
One of the top players in the healthcare space, JNJ researches, develops, manufactures and sells a range of products in the healthcare field worldwide. It operates through three segments: consumer health, pharmaceutical, and medical devices, and is especially known for its baby care products.
The company announced on May 6 that the FDA had approved TECNIS Synergy and TECNIS Synergy Toric II IOLs, and that Health Canada also approved TECNIS Synergy Toric II IOLs. Because the product enables surgeons to address astigmatism during surgery, it could see increasing demand for it in the coming months.
JNJ’s sales increased 7.9% year-over-year to $22.32 billion for its fiscal first quarter, ended March 31, 2021. Its gross profit grew 12% year-over-year to $15.26 billion, while its adjusted net earnings increased 12.5% year-over-year to $6.90 billion. Also, JNJ’s adjusted EPS increased 12.6% year-over-year to $2.59.
For the current quarter ending June 30, 2021, analysts expect JNJ’s EPS and revenue to increase 35.3% and 26%, respectively, year-over-year to $2.26 and $22.19 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 13.9% over the past year to close yesterday’s trading session at $163.84. It is currently trading nearly 6% below its 52-week high of $173.65, which it hit on January 26, 2021.
JNJ’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Stability, and a B grade for Quality, Value, Growth, and Sentiment. Within the Medical – Pharmaceuticals industry, JNJ is ranked #1 of 227 stocks. To see JNJ’s rating for Momentum as well, click here.
Pfizer Inc. (PFE – Get Rating)
PFE discovers, develops, markets, and sells biopharmaceutical products worldwide. It offers medicines and vaccines in various therapeutic areas and is involved in the contract manufacturing business. The company has collaboration agreements with…
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