In this article, we discuss the 10 best pharmaceutical stocks to buy in 2022.
In a post-COVID world, pharmaceutical and biotech companies will be expected to make larger strides as they adapt to artificial intelligence and robotics to enhance drug development and research. The pharma and healthcare industry is focused on gene and cell therapy, monoclonal antibodies, and RNA-based therapeutics heading into 2022 and beyond. The COVID-19 pandemic also pushed for development in clinical trials.
Advancements in medicine and life sciences are being propelled by growing investment across the public and private sectors by multiple forces, including governments, biopharmaceutical companies, technology giants and startups, and even academic institutions, with a focus on bringing to market new innovations that result in predictive and preventative drugs.
The pharmaceutical industry also boasts several players that pay steady dividends and these stocks are held for a diversified income portfolio by investors, including notable industry names like Amgen Inc. (NASDAQ:AMGN), Bristol-Myers Squibb Company (NYSE:BMY), and AbbVie Inc. (NYSE:ABBV).
Our Methodology
We picked pharmaceutical stocks that recently received positive analyst ratings, have strong business fundamentals, and display growth potential. The hedge fund sentiment around each stock was also mentioned to identify the popularity of these companies among the smart money tracked by Insider Monkey as of December 31, 2021.
Photo by Christina Victoria Craft on Unsplash
Best Pharmaceutical Stocks to Buy in 2022
10. Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH)
Number of Hedge Fund Holders: 13
Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) is a California-based specialty pharmaceutical company that manufactures and markets inhalation and intranasal products. At the end of 2021, 13 hedge funds held long positions in Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH), with collective stakes amounting to $28.18 million.
Northland analyst Tim Chiang, who previously named Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) as a top pick for 2022, told investors on February 1 that he believes the recent drop in share price creates a potential buying opportunity. He expects strong top and bottom line growth in 2022 from new product approvals and launches, and has a $29 price target and Outperform rating on Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) shares.
The company received tentative FDA approval on December 29 for Vasopressin, a drug that is meant to increase blood pressure in adults with vasodilatory shock who remain hypotensive despite fluids. Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) shares rose 4% in premarket trading as a result of this announcement.
In addition to Amgen Inc. (NASDAQ:AMGN), Bristol-Myers Squibb Company (NYSE:BMY), and AbbVie Inc. (NYSE:ABBV), Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) is one of the top pharmaceutical companies that hedge funds are gravitating towards.
9. Collegium Pharmaceutical, Inc. (NASDAQ:COLL)
Number of Hedge Fund Holders: 14
Collegium Pharmaceutical, Inc. (NASDAQ:COLL) is an American specialty pharmaceutical company with a drug pipeline focused on pain management.
On February 14, Collegium Pharmaceutical, Inc. (NASDAQ:COLL) announced that it will commence a tender offer to acquire all the outstanding shares of BioDelivery Sciences International, Inc. (NASDAQ:BDSI) at the price of $5.60 per share in an all-cash transaction, representing a total equity value of $604 million.
Needham analyst Serge Belanger on February 15 raised the price target on Collegium Pharmaceutical, Inc. (NASDAQ:COLL) to $34 from $28 and kept a ‘Buy’ rating on the shares. The company’s $604 million acquisition of BioDelivery Sciences International, Inc. (NASDAQ:BDSI) is an “ideal fit” and should strengthen its product portfolio, the analyst told investors in a bullish thesis. He also increased his FY22 EPS view to $4.79 to account for the initial accretion from the addition of BioDelivery’s operations and expected cost synergies.
At the end of Q4 2021, 14 hedge funds were bullish on Collegium Pharmaceutical, Inc. (NASDAQ:COLL) with total stakes equaling $117.9 million, as compared to 13 funds a quarter earlier, holding stakes in Collegium Pharmaceutical, Inc. (NASDAQ:COLL) worth $144.8 million. Rubric Capital Management held a prominent stake in the company as of December 31, 2021, with 2.61 million shares valued at $48.69 million.
8. Sanofi (NASDAQ:SNY)
Number of Hedge Fund Holders: 19
Sanofi (NASDAQ:SNY) develops and markets pharmaceuticals, vaccines, and consumer healthcare products in the United States, Europe, and internationally. The main therapeutic areas targeted by Sanofi (NASDAQ:SNY) include cardiovascular, central nervous system, diabetes, internal medicine, and oncology.
In its Q4 earnings report published on February 4, Sanofi (NASDAQ:SNY) posted EPS of $0.79, beating estimates by $0.07. The company’s revenue came in at $11.45 billion, outperforming estimates by $53.68 million.
UBS analyst Laura Sutcliffe on January 6 raised the firm’s price target on Sanofi (NASDAQ:SNY) to €117 ($132) from €116 ($131) and kept a ‘Buy’ rating on the shares.
According to the Q4 database of Insider Monkey, 19 hedge funds reported owning stakes in Sanofi (NASDAQ:SNY) amounting to $1.47 billion worth of shares.
Here is what Dodge & Cox Funds had to say about Sanofi (NASDAQ:SNY) in its Q3 2021 investor letter:
“Sanofi (3.5% position) is a diversified, global pharmaceuticals company with leading positions in vaccines, consumer health products, rare diseases, and emerging markets. Despite a favorable business mix, Sanofi has underperformed its peers in new product development, commercial execution, and profit growth. A new management team, recruited in 2018-19, has made progress turning the company around. Its drug pipeline is improving, targets for higher margins are being met, and earnings per share are growing. Sanofi also pays a 4% dividend yield, maintains a strong balance sheet, and has relatively low exposure to potential pressures from U.S. drug pricing.”
7. Dynavax Technologies Corporation (NASDAQ:DVAX)
Number of Hedge Fund Holders: 22
Dynavax Technologies Corporation (NASDAQ:DVAX) is a California-based biopharmaceutical company that develops vaccines, with its most notable product being a vaccine for Hepatitis-B. Dynavax Technologies Corporation (NASDAQ:DVAX)’s adjuvant was also used in newly approved COVID-19 shots and booster doses in India.
Goldman Sachs analyst Madhu Kumar reinstated his ‘Buy’ rating and $38 price target on Dynavax Technologies Corporation (NASDAQ:DVAX) on January 5, stating that he is bullish on the company’s long-term opportunity for its hepatitis B vaccine Heplisav-B to prove best-in-class in that space. The analyst also sees near-term value creation from Dynavax Technologies Corporation (NASDAQ:DVAX)’s multiple COVID-19 vaccine partnerships.
Among the hedge funds tracked by Insider Monkey as of the end of December 2021, 22 funds were bullish on Dynavax Technologies Corporation (NASDAQ:DVAX), up from 19 funds in the prior quarter. Partner Fund Management held the biggest stake in the company with nearly 3.81 million shares worth $53.54 million.
6. Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN)
Number of Hedge Fund Holders: 41
Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) is a New York-based biopharmaceutical company that markets drugs and therapies for rare autoinflammatory conditions, colorectal cancer, cardiovascular disease, rheumatoid arthritis, and Ebola virus, among others.
On February 4, Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) reported its Q4 results. The company posted earnings per share of $23.72, exceeding estimates by $3.42. Revenue for the period jumped 104.37% year-on-year to $4.95 billion, surpassing estimates by $425.65 million.
Truist analyst Robyn Karnauskas lowered the firm’s price target on Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) to $728 from $754 on February 8 but kept a ‘Buy’ rating on its shares. The analyst adjusted her model to reflect the sales volume of different Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) products, adding that the key upside for Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) is their evolving oncology platform, with key data catalysts expected this year.
According to the fourth quarter database of Insider Monkey, 41 hedge funds held long positions in Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN), down from 44 funds in the prior quarter. Harris Associates held the biggest stake in Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) in Q4 2021, with 1.32 million shares worth $834 million.
Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) is one of the top pharma picks of elite hedge funds, just like Amgen Inc. (NASDAQ:AMGN), Bristol-Myers Squibb Company (NYSE:BMY), and AbbVie Inc. (NYSE:ABBV).
Oakmark Funds shared its stance on Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) in its Q2 2021 investor letter. Here is what the investment management firm said:
“We restored Regeneron Pharmaceuticals from a rather trivial to a more normal position size. You may recall Regeneron performed well for the Fund during the Covid-19 crisis, so we significantly reduced our position as its price-value gap narrowed. During the past several quarters, however, the market has experienced the now infamous “reopening trade,” in which companies that performed well during the pandemic trailed as the economy reopened. Regeneron suffered a similar fate and its shares have lagged the S&P 500 by roughly 4000 basis points, despite the company’s strong fundamentals and robust pipeline of new products. The underperformance widened Regeneron’s price-value gap, so we restored it to a more normal position size.”
5. Amgen Inc. (NASDAQ:AMGN)
Number of Hedge Fund Holders: 52
Based in Thousand Oaks, California, Amgen Inc. (NASDAQ:AMGN) is a multinational biopharmaceutical company that produces medicines and therapeutic biologicals for migraine, anemia, acute lymphoblastic leukemia, arthritis, osteoporosis, and asthma.
Amgen Inc. (NASDAQ:AMGN) reported earnings for the quarter ending December 2021 on February 7, announcing EPS of $4.36, exceeding estimates by $0.35. Its $6.85 billion in revenue missed the market consensus by $22.57 million however. In 2022, the company plans to buy back $6 billion to $7 billion of its shares, including up to $6 billion worth of stock in the first quarter alone.
On December 3, Amgen Inc. (NASDAQ:AMGN) declared a $1.94 per share quarterly dividend, a 10.2% increase from its prior dividend of $1.76. With a forward yield of 3.83%, Amgen Inc. (NASDAQ:AMGN)’s dividend is payable on March 8 to shareholders of record on February 15. Amgen Inc. (NASDAQ:AMGN) has consistently increased its dividends for 10 years.
Among the hedge funds monitored by Insider Monkey in Q4 2021, 52 funds were bullish on Amgen Inc. (NASDAQ:AMGN), unchanged from the prior quarter. John Overdeck and David Siegel’s Two Sigma Advisors is the largest stakeholder of Amgen Inc. (NASDAQ:AMGN) as of the end of 2021, with 1.81 million shares worth approximately $407 million.
Here is what ClearBridge Sustainability Leaders Strategy had to say about Amgen, Inc. (NASDAQ:AMGN) in its Q3 2021 investor letter:
“In health care, Amgen, a biotechnology company, has endured several pipeline setbacks recently, including a slow transition of its Lumakras treatment into first-line lung cancer, a slower than expected development of its treatment for myeloma as well as the company’s asthma treatment Tezepelumab missing its primary endpoint in a Phase III study. We remain positive on the stock, with Amgen’s investments in biosimilars and its pipeline part of our long-term thesis.”
4. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 61
Headquartered in Indianapolis, Indiana, Eli Lilly and Company (NYSE:LLY) is a pharmaceutical company that is known for manufacturing polio vaccines and insulin. The company markets its products in 125 countries.
Eli Lilly and Company (NYSE:LLY) posted its Q4 results on February 3, reporting EPS of $2.49, missing estimates by $0.02. The company’s revenue over the period came in at $8 billion, up 7.53% from the prior-year quarter, surpassing estimates by $113.13 million.
On February 14, Eli Lilly and Company (NYSE:LLY) was awarded a $1.08 billion fixed price contract for the manufacture, distribution, and storage of Bebtelovimab in support of the national emergency response to COVID-19.
On February 4, Morgan Stanley analyst Matthew Harrison lowered the firm’s price target on Eli Lilly and Company (NYSE:LLY) to $265 from $272 and kept an ‘Overweight’ rating on the shares. He adjusted his model following the company’s Q4 report, along with which management gave guidance that they plan to delay donanemab’s accelerated approval filing until later this year.
According to the Q4 database of Insider Monkey, 61 hedge funds were bullish on Eli Lilly and Company (NYSE:LLY), with collective stakes amounting to $5.31 billion, compared to 62 funds a quarter earlier, holding stakes in Eli Lilly and Company (NYSE:LLY) worth approximately $4.29 billion.
Here is what Baron Funds had to say about Eli Lilly and Company (NYSE:LLY) in its Q2 2021 investor letter:
“We started a position in Eli Lilly and Company, a large-cap pharmaceutical company. We think Lilly has a healthy base business with limited near-term patent expirations, a strong pipeline, and potential for significant margin expansion, which should translate to high single-digit revenue growth and mid-teens earnings growth over the next five years. Lilly’s pipeline includes donanemab, a potential blockbuster drug which the company is developing for Alzheimer’s disease and which recently received Breakthrough Therapy Designation by the FDA.”
3. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 66
Bristol-Myers Squibb Company (NYSE:BMY) is a multinational pharmaceutical company that develops prescription pharmaceuticals for diseases including cancer, HIV, AIDS, cardiovascular disease, diabetes, hepatitis, rheumatoid arthritis, and psychiatric disorders. Bristol-Myers Squibb Company (NYSE:BMY) is headquartered in New York City.
On February 4, Bristol-Myers Squibb Company (NYSE:BMY) reported its fourth quarter results. The company posted EPS of $1.83, exceeding estimates by $0.03. Revenue for the period jumped 8.29% year-over-year to $11.99 billion, surpassing estimates by $12.68 million.
Goldman Sachs analyst Chris Shibutani initiated coverage of Bristol-Myers Squibb Company (NYSE:BMY) on December 17 with a ‘Buy’ rating and $72 price target, implying 6.7% upside from current levels. The analyst sees an attractive entry point in the shares, as he believes current levels reflect “overly pessimistic views” on the outlook for the company’s new product launches and key pipeline assets.
Bristol-Myers Squibb Company (NYSE:BMY) priced a public offering of senior unsecured notes on February 15 with a combined principal amount of $6 billion. The offer is expected to close on March 2.
Bristol-Myers Squibb Company (NYSE:BMY) announced a quarterly dividend per share of $0.54 on December 13, which is a 10.2% increase from its prior dividend of $0.49. The dividend was paid on February 1 to shareholders of record on January 7.
Among the hedge funds tracked by Insider Monkey, 66 hedge funds were bullish on Bristol-Myers Squibb Company (NYSE:BMY) as of December 31, with collective stakes amounting to $3.31 billion. Warren Buffett’s Berkshire Hathaway is one of the leading Bristol-Myers Squibb Company (NYSE:BMY) stakeholders with 5.2 million shares valued at $320 million, though the holding company unloaded 77% of its BMY stake during Q4.
Wedgewood Partners mentioned Bristol-Myers Squibb Company (NYSE:BMY) in its Q4 2020 investor letter. Here is what the fund had to say:
“Bristol-Myers Squibb recently reported accelerating sales as much of the medical services industry returned to work. The Company continues to expect double-digit earnings growth over the next few years, driven by existing drugs, in addition to a broad pipeline of new drugs and indications. While the market remains fixated on a couple of patent expirations that could occur over the next several years, we think this is well-known at this point, yet the market still undervalues a couple of key acquisitions the Company has made in the past few years, particularly Celgene, which was acquired for a song.”
2. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 80
Merck & Co., Inc. (NYSE:MRK) is an American pharmaceutical company that develops and markets pharmaceuticals, generic drugs, over-the-counter drugs, vaccines, diagnostics, and veterinary medicine.
On February 3, Merck & Co., Inc. (NYSE:MRK) reported its EPS for the fourth quarter, which came in at $1.80, exceeding estimates by $0.28. Merck & Co., Inc. (NYSE:MRK)’s revenue for the period came in at $13.52 billion, up 8.05% year-on-year, outperforming estimates by $308.78 million.
On January 25, Merck & Co., Inc. (NYSE:MRK) declared a $0.69 per share quarterly dividend, in line with its previous payout. The latest dividend is payable on April 7 to shareholders of record on March 15.
JPMorgan analyst Chris Schott lowered the investment bank’s price target on Merck & Co., Inc. (NYSE:MRK) to $95 from $100 on January 28 and kept an ‘Overweight’ rating on the shares ahead of the company’s Q4 results. The analyst does not expect any major surprises in relation to the company’s 2022 guidance based on the positive momentum he’s seeing in Merck & Co., Inc. (NYSE:MRK)’s core business and with near-term upside from molnupiravir sales.
Following the fourth quarter of 2021, 80 hedge funds were bullish on Merck & Co., Inc. (NYSE:MRK), holding stakes worth $3.78 billion. Arrowstreet Capital is a prominent Merck & Co., Inc. (NYSE:MRK) stakeholder, with 8.32 million shares worth $638 million.
Here is what Miller Howard Investments had to say about Merck & Co., Inc. (NYSE:MRK) in its Q3 2021 investor letter:
“While optimistic about a recovery, we continue to balance our cyclical holdings with dividend-payers in stable, less economically-sensitive industries. We hold three pharmaceutical companies, (which includes) Merck (MRK). All three have strong cash flows and balance sheets, making their high dividends reasonably safe. The investment controversy surrounding these pharma companies is whether they can develop or acquire new products to replace their current blockbuster drugs. The low valuations on these stocks reflects what we believe to be undue pessimism by investors on the prospects for new drugs.”
1. AbbVie Inc. (NYSE:ABBV)
Number of Hedge Fund Holders: 82
AbbVie Inc. (NYSE:ABBV), the Illinois-based biopharmaceutical company that provides medicines and vaccines for therapeutic focus areas including immunology, oncology, neuroscience, and virology, tops the list of Best Pharmaceutical Stocks to Buy in 2022.
On February 4, Mizuho analyst Vamil Divan raised the company’s price target on AbbVie Inc. (NYSE:ABBV) to $166 from $154 and kept a ‘Buy’ rating on ABBV shares, stating that he continues to see AbbVie Inc. (NYSE:ABBV) as a Top Pick since the company’s “more diversified growth story” exceeded expectations in the fourth quarter of 2021.
AbbVie Inc. (NYSE:ABBV) reported earnings for the quarter ending December 2021 on February 2. The company announced EPS of $3.31, beating estimates by $0.03. However, its $14.89 billion in revenue missed consensus estimates by approximately $73 million.
Of the 82 hedge funds that were bullish on AbbVie Inc. (NYSE:ABBV) at the end of Q4 2021, Orbis Investment Management held a significant stake in the company, with more than 3 million shares worth $324.3 million.
On October 29, AbbVie (NYSE:ABBV) declared a $1.41 per share quarterly dividend, an 8.5% increase from its prior dividend of $1.30. The dividend was paid on February 15 to shareholders of record on January 14.
Here is what Miller Howard Investments had to say about AbbVie Inc. (NYSE:ABBV) in its Q3 2021 investor letter:
“While optimistic about a recovery, we continue to balance our cyclical holdings with dividend-payers in stable, less economically-sensitive industries. We hold three pharmaceutical companies, (which includes) AbbVie (ABBV). All three have strong cash flows and balance sheets, making their high dividends reasonably safe. The investment controversy surrounding these pharma companies is whether they can develop or acquire new products to replace their current blockbuster drugs. The low valuations on these stocks reflects what we believe to be undue pessimism by investors on the prospects for new drugs.”
You can also take a look at Early Retirement Portfolio: 15 Stocks to Live Off Dividends and 10 Best Dividend Kings to Buy for 2022.
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Disclosure: None. 10 Best Pharmaceutical Stocks to Buy in 2022 is originally published on Insider Monkey.
