In this article, we will look at the 10 Oversold Pharma Stocks to Buy According to Analysts.
On February 20, Emily Field, Head of European Pharma Research at Barclays, appeared on CNBC to discuss the dynamics of the pharmaceutical sector, the impact of US tariffs, and the performance of obesity drugs. She believed the industry may not underperform this year, at least in the first half. However, there are still several questions surrounding the performance of obesity drugs, as major players in the domain have exhibited contrasting previous year performance.
Talking about the tariffs, she said that their materialization poses a big open question for the pharmaceutical sector as some companies assemble their products in the US after manufacturing them abroad. Manufacturing costs are thus pretty low for these companies, which is a significant point to consider when determining the impact of tariffs. She believed that absorbing the additional cost of the tariffs would be very manageable for these companies. The market has reached the tail-end of the earnings season, and the situation hasn’t come up much on earnings calls over this quarter.
We recently talked about what Trump’s tariffs could mean for the healthcare industry in a recently published article on 12 Most Oversold Healthcare Stocks to Buy Now. Here is an excerpt from the article:
“Since more and more companies in the US are looking towards China for deals regarding the next promising molecule, whether in the obesity or cancer space, the impact of tariffs on this ongoing trend has become a subject of significant discussion in the healthcare industry. On February 7, Carlo Rizzuto, Versant Ventures managing director, appeared on CNBC’s ‘Fast Money’ to discuss the impact of tariffs on healthcare. Rizzuto believed that there are two ways in which tariffs could impact the industry. The first would be products innovated in China and brought over to the US or other markets. To understand how the tariffs would affect such trade processes, the industry would have to see how the tariffs are actually structured in the market.
Secondly and more tangibly, China is a massive center for contract research and manufacturing for the US healthcare industry. Therefore, anything that increases that cost is likely to make the market conditions more challenging. The healthcare industry is already under pressure in terms of investor sentiment, and an increase in cost is not going to help its functioning.”
Weight Loss Drugs and the Attention Around Them
Angelica Peebles, CNBC’s Health and Pharma reporter, sat with Eli Lilly’s Chief Scientific Officer to talk about the weight loss sector. From the conversation, she reported that the domain poses opportunity for drugs that are easier to use, such as pills, and medicines that make people lose more weight. Another debate people are having regarding the domain is how much weight loss users need to see on top of what they already have. Drugs delivering around 20% weight loss appear to benefit most of the audience, according to Eli Lilly’s Chief Scientific Officer Dan Skovronsky. He sees more potent drugs that deliver around 25% or more as having a smaller market.
He was further of the opinion that the most exciting thing he has seen in his career as a scientist and physician is how a multitude of diseases can potentially benefit from these weight loss drugs. Right now, their source for this information is the trends they have been seeing in patients’ responses.
With these trends in mind, let’s examine the 10 oversold pharma stocks to buy according to analysts.
A well-stocked pharmacy shelf full of the company’s pharmaceuticals, nutraceuticals, over-the-counter medications, and health care products.
Our Methodology
We used stock screeners to compile a list of pharma stocks that experienced significant declines over the past year. We then selected the 10 stocks with the highest analyst upside potential. We also added the number of hedge fund holders for these stocks, as of Q3 2024. The list is sorted in ascending order of analyst upside potential, as of February 21, 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 363.5% since May 2014, beating its benchmark by 208 percentage points (see more details here).
10 Oversold Pharma Stocks to Buy According to Analysts
10. Stevanato Group S.p.A. (NYSE:STVN)
Year Perf: -36.88%
Analyst Upside: 35.73%
Number of Hedge Fund Holders: 11
Based in Italy, Stevanato Group S.p.A. (NYSE:STVN) is a manufacturer and distributor that operates in the Biopharmaceutical and Diagnostic Solutions and Engineering segments. It produces and distributes diagnostic solutions, drug containment solutions, and drug delivery systems and is involved in all stages of drug development. Its Engineering segment manages the equipment and technologies developed and provided for pharmaceutical, biotechnology, and diagnostic manufacturing processes. Stevanato Group S.p.A. (NYSE:STVN) operates locally in Europe and globally in the US, Mexico, China, and Brazil.
The company reported a 2% growth in revenue in fiscal Q3 2024 to €277.9 million compared to the same quarter last year. This growth was supported by a 6% growth in the Biopharmaceutical and Diagnostic Solutions (BDS) segment. Stevanato Group S.p.A. (NYSE:STVN) also reported that revenue from high-value solutions rose to 36% of total revenue in fiscal Q3 2024, compared to 32% for the same period last year. This was attributed to higher customer demand for high-performance syringes and other products. The company has maintained its fiscal year 2024 revenue guidance and continues to expect revenue of between €1,090 million and €1,110 million.
Stevanato Group S.p.A. (NYSE:STVN) operates in growing end markets with favorable secular tailwinds, and the company is confident in its strategic direction. It is continually delivering organic growth driven by high-value solutions, which is the central pillar of its long-range construct. It also anticipates increasingly benefiting from its new capacity in Italy and the US, advancing its ramp-up activities and driving profitable growth. In addition, the vial market continues to show positive signs, which is why management is optimistic that as demand stabilizes, Stevanato Group S.p.A.’s (NYSE:STVN) operations will return to historical market volumes and growth rates.
9. Novo Nordisk A/S (NYSE:NVO)
Year Perf: -32.48%
Analyst Upside: 45.60%
Number of Hedge Fund Holders: 61
Novo Nordisk A/S (NYSE:NVO) is a global healthcare company specializing in diabetes care. It develops, discovers, manufactures, and markets pharmaceutical products. Its operations are divided into two business segments: biopharmaceuticals and diabetes and obesity care. The latter segment covers GLP-1, insulin, and other protein-related products.
Novo Nordisk A/S (NYSE:NVO) is functioning on strong fundamentals. Fiscal 2024 was a strong year for the company, with sales climbing 25% to $40.6 billion. It also raised its total dividend per share by 21.3% to DKK 11.40, which includes an interim dividend of DKK 3.50 distributed in August. This is the 29th consecutive year of dividend growth at NVO.
Novo Nordisk A/S (NYSE:NVO) is one of the two major pharmaceutical companies competing in the GLP-1 weight loss market, with the other being Eli Lilly. While both companies have approved weight loss medicines leading the market with billions in revenue, Novo Nordisk A/S (NYSE:NVO) is working on a new oral weight loss pill that may transform the market if approved. Novo Nordisk CEO Lars Fruergaard Jørgensen said the company plans to file for regulatory approval for its oral weight loss drug in the United States in the coming months. If the company gains approval, it may be able to launch the drug as early as next year, which is when Eli Lilly also plans the release of its weight loss drug.
Apart from potential optimism surrounding this oral weight loss drug, Novo Nordisk A/S (NYSE:NVO) expects a free cash flow of around DKK 75 to 85 billion in 2025 and sales growth of 16-24% at constant exchange rates. The company ranks ninth on our list of the 10 oversold pharma stocks to buy according to analysts.
ClearBridge Large Cap Growth Strategy stated the following regarding Novo Nordisk A/S (NYSE:NVO) in its Q4 2024 investor letter:
“Similarly, we used a temporary price dislocation caused by disappointing clinical trial results to purchase shares of Novo Nordisk A/S (NYSE:NVO), a Danish-based leader in diabetes and obesity treatments. Novo’s Wegovy semaglutide drug was first to market among the new generation of obesity drugs; however, the company has lost market share to portfolio holding Eli Lilly due to delays in scaling up production volumes and superior weight loss results demonstrated by Lilly’s trizepatide drugs. While the initial market reaction to Novo’s more enhanced CagriSema weight loss treatment was negative, we believe this is a more potent formulation that can better compete with Lilly’s suite. With Novo poised to have a better product portfolio and improved supply position, we find the company’s valuation very attractive given the large secular growth trends behind the diabesity market.”