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15 Best Drug Stocks to Buy Now

In this article, we discuss the 15 best drug stocks to buy now. If you want to read about some more stocks, go to 5 Best Drug Stocks to Buy Now.

According to the International Federation of Pharmaceuticals Manufacturers & Associations, the global pharmaceutical sector or the drug industry is expected to post annual revenues of $1.5 trillion in 2023. The COVID-19 pandemic brought the pharmaceutical sector into the limelight as the demand for drugs and vaccines observed a sharp spike. Companies like Merck & Co., Inc. (NYSE:MRK), Johnson & Johnson (NYSE:JNJ), and Pfizer Inc. (NYSE:PFE) became the frontrunners as they released one of the most anticipated vaccines in human history. According to Statista, some of the best pharmaceutical stocks spent $200 billion in research and development (R&D) of new drugs to stay ahead of the curve in 2020. However, with the pandemic nearing an end, companies have shifted their focus to emerging trends in the healthcare sector.

According to Grand View Research, the pharmaceutical sector will continue to experience secular tailwinds like growth in population and aging, providing an opportunity for the industry to compound its sales annually by 11.3% till 2028. By 2050, there will be over 2 billion people who are 60 years of age or older, according to WHO forecasts. Although the equity market has come under pressure in the recent past due to raging inflation, geopolitical tensions, and rising interest rates, the best pharmaceutical stocks have held their ground.

Our Methodology

The stocks shortlisted have strong business fundamentals and positive analyst ratings. We have analyzed the growth prospects for these companies to assess the upside potential they can offer to investors in the long run. These companies are considered among the best pharmaceutical stocks due to their robust pipelines and R&D efforts which are expected to yield strong earnings. The hedge fund sentiment discussed is based on the 895 hedge funds tracked by Insider Monkey as of Q2 2022.

Best Drug Stocks to Buy Now

15. ImmunityBio, Inc. (NASDAQ:IBRX)

Number of Hedge Fund Holders: 8

ImmunityBio, Inc. (NASDAQ:IBRX) is a San Diego, California-based clinical-stage biotech company focused on developing therapeutics that enhance the ability of the immune system to combat cancers and infections through its proprietary drug therapy platforms.

ImmunityBio, Inc. (NASDAQ:IBRX) has approved the Biologics License Applications (BLA) for Ankitva, which is the main candidate for the treatment of nonmuscle invasive bladder cancer (NMIBC) that is unresponsive to Bacille Calmette-Guérin (BCG) treatment. Furthermore, ImmunityBio, Inc. (NASDAQ:IBRX) is involved in more than 25 clinical trials and this reflects the wide applicability and versatility of the core offerings provided by the company. Based on these developments, Kelly Shi at Jefferies initiated coverage on ImmunityBio, Inc. (NASDAQ:IBRX) stock with a target price of $8 and a Buy rating.

At the end of Q2 2022, 8 hedge funds held a stake in ImmunityBio, Inc. (NASDAQ:IBRX).

14. Novartis AG (NYSE:NVS)

Number of Hedge Fund Holders: 22

Novartis AG (NYSE:NVS) is a Basel, Swiss-American drug company that is expected to do well in case of a recession.

The outperformance of the broader equity market by Novartis AG (NYSE:NVS) YTD is evidence of the strong fundamentals of the company. Novartis AG (NYSE:NVS) stock provides an attractive forward dividend yield of 4.38% as of October 17. The dividend yield is significantly higher than the industry average and also in line with the risk-free 10-year US Treasury bond yield. Cosentyx and Entresto are two leading drugs of Novartis AG (NYSE:NVS) that are expected to post double-digit revenue growth in the coming years. The two drugs currently contribute 19% to the top line of Novartis AG (NYSE:NVS).

Fisher Asset Management was the leading hedge fund investor in Novartis AG (NYSE:NVS) during the second quarter of the year.

13. Novo Nordisk A/S (NYSE:NVO)

Number of Hedge Fund Holders: 32

Novo Nordisk A/S (NYSE:NVO) is a Bagsværd, Denmark-based pharmaceutical company with production facilities in nine countries.

In an update issued to investors on September 28, Martial Descoutures at Oddo BHF upgraded Novo Nordisk A/S (NYSE:NVO) stock from a Neutral to an Outperform rating with a target price of $118.57. The target price reflects a potential upside of over 14% from the closing price as of October 17.

Novo Nordisk A/S (NYSE:NVO) is diversifying from conventional insulin-based products and focusing on Obesity Care Unit through products like Wegovy. Furthermore, the company is making progress in the arena of weight-loss treatment by offering products that are widely accepted by all the stakeholders of the healthcare sector. Novo Nordisk’s A/S (NYSE:NVO) diversification strategies make the company one of the best pharmaceutical stocks in the market right now.

Baron Funds discussed its outlook on Novo Nordisk A/S (NYSE:NVO) in its Q2 2022 investor letter. Here’s what the firm said:

“We added to our position in Novo Nordisk A/S, a leading global biopharmaceutical company headquartered in Denmark that specializes in treatments for diabetes, obesity, and other chronic diseases. We wrote about Novo Nordisk in last quarter’s letter. We continue to believe Novo Nordisk’s diabetes and anti-obesity franchise will drive attractive revenue and earnings growth for many years to come. We think both Novo Nordisk and competitor Eli Lilly and Company(which we also own in the Fund) can be successful in these large markets.”

12. GSK plc (NYSE:GSK)

Number of Hedge Fund Holders: 34

GSK plc (NYSE:GSK) is a Brentford, UK-based drug company that is planning to spin off its consumer healthcare division to focus more on the pharmaceutical side of the business.

On September 29, Martial Descoutures at Oddo BHF upgraded GSK plc (NYSE:GSK) stock from a Neutral to an Outperform rating with a per share target price of GBP 17. The ADRs listed on the NYSE are equivalent to two ordinary shares, and the target price translates to $37.64.

GSK plc (NYSE:GSK) received a boost on October 7 after the FDA approved the use of Boostrix during pregnancy for the prevention of whooping cough in infants younger than two months of age. GSK plc’s (NYSE:GSK) twelve months trailing (TTM) PE ratio stands at 7.4x, which is considerably lower than the industry average of 17.9x. Analysts think GSK plc (NYSE:GSK) is amongst the best pharmaceutical stocks in the market as the stock has the potential to generate strong returns for investors in the future.

Point72 Asset Management raised its stake in GSK plc (NYSE:GSK) by 300% during Q2 2022.

11. Moderna, Inc. (NASDAQ:MRNA)

Number of Hedge Fund Holders: 45

Moderna, Inc. (NASDAQ:MRNA) is a Cambridge, Massachusetts-based pharmaceutical entity that has led the way for mRNA vaccines. The company is one of the best pharmaceutical stocks in the industry currently.

On October 12, it was announced that Moderna, Inc. (NASDAQ:MRNA) would work alongside Merck & Co., Inc. (NYSE:MRK) to develop and commercialize personalized cancer vaccines. Merck exercised its discretion in developing the vaccine together, triggering a milestone payment of $250 million for Moderna, Inc. (NASDAQ:MRNA). Experts see this as a positive development for Moderna, Inc. (NASDAQ:MRNA) as it heads towards the Phase-II trial of the personalized cancer vaccine with Merck’s Keytruda for the treatment of high-risk melanoma during Q4 2022. On the back of this development, Edward Tenthoff at Piper Sandler reiterated an Overweight rating on Moderna, Inc. (NASDAQ:MRNA) stock with a target price of $214.

Here’s what Baron Funds said about Moderna, Inc. (NASDAQ:MRNA) in its Q3 2021 investor letter:

Moderna, Inc. is a leader in the emerging field of mRNA-based vaccines and therapeutics. Shares performed well for the quarter. Moderna has been one of the most successful companies in the race to develop and provide a COVID-19 vaccine and is focusing on introducing a COVID-19 booster combined with the flu shot. With the COVID-19 vaccine success under its belt, we think Moderna has potential to disrupt the entire biopharmaceutical industry, from infectious disease vaccines to oncology and rare disease treatment.”

10. Viatris Inc. (NASDAQ:VTRS)

Number of Hedge Fund Holders: 50

Viatris Inc. (NASDAQ:VTRS) is a Canonsburg, Pennsylvania-based drug corporation.

Viatris Inc. (NASDAQ:VTRS) is looking into offloading its $2.9 billion European consumer healthcare business. The division responsible for manufacturing over-the-counter (OTC) drugs could gain the attention of leading private equity firms and other consumer healthcare companies that are interested in creating synergies and experiencing growth in the region. Viatris Inc. (NASDAQ:VTRS) is following the trend of spinning off the consumer healthcare segment to increase focus on the pharmaceutical side of the business.

Based on a number of aspects, Viatris Inc. (NASDAQ:VTRS) appears to be one of the best pharmaceutical stocks in the industry currently. Viatris Inc. (NASDAQ:VTRS) offers an annual forward dividend yield of 4.97% as of October 17. In FY22, the company projects $16.2 billion to $16.7 billion in revenues, $5.8 billion to $6.2 billion in adjusted EBITDA, and $2.5 billion to $2.9 billion in free cash flow.

Viatris Inc. (NASDAQ:VTRS) was discussed in the Q4 2021 investor letter of Davis Funds. Here’s what the firm said:

“Healthcare is included in the portfolio both for company-specific reasons, as well as big picture trends. At the company level, we hold select companies in pharmaceuticals, healthcare services and health insurance at attractive valuations. This is at a time when the average age of the U.S. population is fast approaching 40, older than Asia-Pacific and a little younger than the aged populations of Europe and Japan. The number of seniors in the U.S.—i.e., 65 years or older— now surpasses 54 million, or about 15% of the population. Seniors, on average, take a much greater number of medications and account for a large and disproportionate share of healthcare spending, and we expect that trend to continue due to both raw demographics and a proliferation in the number of available treatments and services available now, the latter being driven by innovation and investment in the healthcare industry. Representative holdings in the Fund include Cigna, United Health Group, Viatris and Quest Diagnostics.”

9. Biogen Inc. (NASDAQ:BIIB)

Number of Hedge Fund Holders: 54

Biogen Inc. (NASDAQ:BIIB) is a Cambridge, Massachusetts-based biotechnology company that is focused on finding treatments for neurological diseases.

On October 12, Paul Matteis at Stifel upgraded Biogen Inc. (NASDAQ:BIIB) stock from a Hold to a Buy rating and increased the target price from $223 to $299. Biogen Inc.’s (NASDAQ:BIIB) share price has been on an upward trend following the disclosure of the positive data for lecanemab, with very few concerns related to competitive and commercial risks. The analyst thinks that the risk and reward profile of Biogen Inc. (NASDAQ:BIIB) stock is skewed towards the reward side.

Longleaf Partners Fund shared its stance on Biogen Inc. (NASDAQ:BIIB)  in its Q4 2021 investor letter. Here’s what the firm said:

Biogen (83%, 2.43%; 5%, 0.10%), a biotechnology company specializing in therapies for the treatment of neurological diseases, was a strong contributor before we exited the position in the first half. We began acquiring shares in January 2021, paying between 9- 11x FCF and a discount to our appraisal, even if the company’s promising drug pipeline turned out to be worth 0. After Biogen’s Alzheimer drug Aduhelm was approved in June, we quickly sold out after the stock’s price appreciated over 70% and briefly exceeded our appraisal of the value. We re-initiated a position in Biogen in December at a price below our original cost basis from January. The stock became very cheap once again after Aduhelm’s early sales disappointed due to its high initial cost before management correctly cut the price. We think Biogen’s core Multiple sclerosis (MS) and Biosimilars businesses are strong enough to create sustainable double-digit EPS growth, even if Aduhelm and the entire Alzheimer’s program is worth zero. We also expect a board led by large shareholders to continue the company’s accretive repurchase, while considering other beneficial corporate actions.”

8. Amgen Inc. (NASDAQ:AMGN)

Number of Hedge Fund Holders: 55

Amgen Inc. (NASDAQ:AMGN) is a Thousand Oaks, California-based biotechnology company.

On October 11, Matthew Harrison at Morgan Stanley upgraded Amgen Inc. (NASDAQ:AMGN) stock from an Equal Weight to an Overweight rating and also increased the target price from $279 to $257. Given the potential of the medium-term drug pipeline of the company, the analyst thinks Amgen Inc. (NASDAQ:AMGN) is amongst the best pharmaceutical stocks to invest in. Harrison believes that in the current macroeconomic environment, Amgen Inc. (NASDAQ:AMGN) offers a defensive positioning with an attractive long-term upside potential based on the outlook of the AMG133 for obesity care and the launch of biosimilar Amjevita.

In its Q2 2022 investor letter, Aristotle Capital Management shared its insights on Amgen Inc. (NASDAQ:AMGN). Here’s what the firm said:

Amgen Inc. (NASDAQ:AMGN), the pharmaceutical company focused on biotechnology-based therapeutics, was also a top contributor for the quarter. The company reported solid results, with a variety of products, such as bone-strengthening drugs Prolia and EVENITY, contributing to overall revenue growth. Amgen continued to increase the market share for cholesterol drug Repatha (a catalyst we had originally identified), delivering record quarterly sales as the drug’s usage expands with high-risk patients who have not yet had a cardiovascular event, and as barriers for prescribers, healthcare systems and patients are removed. In addition, we believe the company is poised to gain market share with its biosimilars (akin to generic versions of biologic drugs), also a previously identified catalyst. Biosimilars accounted for over $2 billion in revenue in 2021, and we believe this has the potential to more than double by the end of the decade, accelerated by six additional biosimilars (for a total of 11 products on the market). This includes the upcoming launch in the U.S. of arthritis treatment Amjetiva in January 2023. Meanwhile, the company is advancing its robust pipeline of early- and late-stage assets, with several phase III results due this year. These developments have caused us to remain enthusiastic about Amgen’s ability to build on its decades of success developing novel treatments using biopharmaceuticals.”

7. Gilead Sciences, Inc. (NASDAQ:GILD)

Number of Hedge Fund Holders: 58

Gilead Sciences, Inc. (NASDAQ:GILD) is a Foster City, California-based pharmaceutical company focused on developing antiviral drugs.

Chris Schott at JPMorgan upgraded Gilead Sciences, Inc. (NASDAQ:GILD) stock from a Neutral to an Overweight rating on October 4. The analyst also increased the target price from $72 to $80. Schott highlighted that the current valuation of Gilead Sciences, Inc. (NASDAQ:GILD) does not truly reflect the higher visibility of the HIV division and the rising oncology division of the business. The analyst elaborated that the current market capitalization of Gilead Sciences, Inc. (NASDAQ:GILD) only covers the value of the HIV business. The company’s oncology division is expected to post annual sales of $5 billion by the end of this decade.

Gilead Sciences, Inc. (NASDAQ:GILD) offers an annual forward dividend yield of 5.63% as of October 17. The company’s strong growth prospects have led many to see its as one of the best pharmaceutical stocks to invest in.

Of the 895 hedge funds in Insider Monkey’s database, Gilead Sciences, Inc. (NASDAQ:GILD) was held by 58 hedge funds as of Q2 2022.

6. Bristol-Myers Squibb Company (NYSE:BMY)

Number of Hedge Fund Holders: 69

Bristol-Myers Squibb Company (NYSE:BMY) is a New York-based biopharmaceutical company that has seen a significant surge in revenue and earnings following the acquisition of cancer specialist Celgene and cardiology company MyoKardia. The company has also been focusing on internal operations to expand its drug portfolio.

Bristol-Myers Squibb Company (NYSE:BMY) holds a leading position in the field of oncology and works actively to enhance its presence in the fields of cardiovascular and immunological diseases. Experts believe that the company’s clinical and regulatory execution has been solid this year as it received approval for multiple drugs, namely Camzyos, Opdualag, and Sotyktu. Bristol-Myers Squibb Company (NYSE:BMY) is investing heavily in research and development for its Phase- III trials. Analysts think Bristol-Myers Squibb Company (NYSE:BMY) is amongst the best pharmaceutical stocks as the stock offers considerable upside in the long run.

Here’s what Baron Funds said about Bristol-Myers Squibb Company (NYSE:BMY) in its Q2 2022 investor letter:

“We established a position in Bristol-Myers Squibb Company, a global biopharmaceutical company focused on discovering, developing, and selling medicines for patients in the therapeutic areas of oncology, immunology, cardiovascular, and neurology. The stock trades at a low valuation relative to its current earnings because the company faces loss of exclusivity on several key drugs over the next eight years, including Revlimid, Eliquis, and Opdivo.

At the same time, Bristol-Myers has multiple new products in the early stages of launch (e.g., Opdualag, Camzyos, Breyanzi, and Reblozyl), a robust new product pipeline (e.g., Deucravacitinib, Milvexian, and CELMoD agents), and a strong balance sheet combined with strong free cash flow generation that the company can use for acquisitions. Management believes these growth drivers can more than offset the loss of exclusivity and drive revenue growth through the end of the decade. Given the company’s low valuation, if the company can execute, we think there is substantial upside in the stock.”

In addition to Bristol-Myers Squibb Company (NYSE:BMY), companies like Merck & Co., Inc. (NYSE:MRK), Johnson & Johnson (NYSE:JNJ), and Pfizer Inc. (NYSE:PFE) are among the best pharmaceutical stocks in the industry.

Click to continue reading and see the 5 Best Drug Stocks to Buy Now.

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Disclose. None. 15 Best Drug Stocks to Buy Now is originally published on Insider Monkey.

AI, Tariffs, Nuclear Power: One Undervalued Stock Connects ALL the Dots (Before It Explodes!)

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A New Dawn is Coming to U.S. Stocks

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Should I put my money in Artificial Intelligence?

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Click to continue reading…