2 Pharmaceutical Stocks to Buy and Hold for the Next 10 Years

As the COVID-19 Delta variant continues its rapid spread, COVID-19 cases are resurfacing in the United States, which has dragged the pharma sector back to center stage. As several countries continue to prioritize the vaccination of their populations to fight the coming new strains of the COVID-19 virus, pharmaceutical companies are now again focused on ramping up their vaccine production to meet the growing demand.

But the increasing prevalence of chronic diseases throughout the world is also expected to drive the demand for pharma products. Furthermore, the digital revolution in  providing life-transforming treatments to patients and increasing investments in R&D to develop efficient drugs to fight various critical health conditions are expected to be the major growth drivers of pharmaceutical companies. Consequently, the global pharmaceuticals market is expected to hit  $1,700.97 billion in 2025, registering an 8% CAGR

Given this backdrop, shares of leading pharmaceutical companies with resilient business models—Pfizer Inc. (PFE) and Eli Lilly and Company (LLY)—hold solid upside potential. So, we believe these two stocks could be solid buy-and-hold bets for the next 10 years.

Click here to checkout our Healthcare Sector Report for 2021

Pfizer Inc. (PFE)

PFE is a New York City-based biopharmaceutical company that engages primarily in the research, development, and production of healthcare products. Pfizer innovative health (PH) and Pfizer Essential Health (EH) are the two business segments the company operates. The company is mostly known for its blockbuster COVID-19 vaccine under the Prevnar 13/Prevenar 13 (pediatric/adult) and the Pfizer-BioNTech COVID-19 vaccine brands.

Last month, Pfizer and BioNTech SE announced that the U.S. government had purchased an additional 200 million doses of the Pfizer-BioNTech COVID-19 vaccine, bringing the total number of doses to be supplied to 500 million under the existing supply agreement with the U.S. government. These doses are planned to be delivered between October 2021 – April 2022.

During the second quarter, ended June 30, 2021, PFE’s revenue increased 92.4% year-over-year to $18.98 billion. Its net income increased 59.5% year-over-year to $5.56 billion, while its EPS grew 58.1% from the prior-year quarter to $0.98. Its revenues under its  oncology segment increased 18.8% year-over-year to $3.15 billion over this period.

PFE is expected to generate 73.7%  revenue growth for the current year. Its EPS is estimated to increase 66.7% year-over-year to $3.7 in 2021. Over the past year, PFE’s stock has gained 10.5%. Furthermore, it has gained 16.3% year-to-date.

PFE’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

PFE is  rated a B grade for Value, Growth, and Stability. Additionally, within the Medical-Pharmaceuticals industry, it is ranked #3 of 220 stocks.

To see additional POWR Ratings for Momentum, Quality, and Sentiment for PFE, click here.

Note that PFE is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.

Eli Lilly and Company (LLY)

See also  https://stocknews.com/stock/HNI/news/

LLY is a pharmaceutical company that discovers , develops, manufactures, and markets human medicinal products. The company’s product portfolio includes diabetes and other endocrinology products, including Baqsimi, Basaglar, Forteo, Humalog, Humatrope, Humulin, Jardiance, Trajenta, and Trulicity. In addition, its COVID-19 drug portfolio includes Bamlanivimab and etesevimab.

Last month, LLY announced that the U.S. Food and Drug Administration (FDA) had expanded an  Emergency Use Authorization (EUA) for baricitinib with or without remdesivir for treatment of COVID-19 in hospitalized adults and pediatric patients two years of age or older. This authorization should enable the company to continue to meet the urgent medical needs resulting from the pandemic.

During the first quarter, ended March 31, 2021, LLY’s revenue increased 16.1% year-over-year to $6.81 billion. Its net cash from operating profit surged 343.9% year-over-year to $1.70 billion, while its cash and cash equivalents grew 76.7% from the prior-year quarter to $3 billion. Also,  the company’s gross margin increased 6.1% year-over-year to $4.93 billion over this period.

The $8.56 consensus EPS estimate for the next year represents an 8.4% improvement year-over-year. The $27.22 billion consensus revenue estimate for the current year represents a 10.9% increase from the same period last year. The stock has gained 59.2% over the past year and 44.2% year-to-date.

LLY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has a B grade for Quality and Stability. In the Medical-Pharmaceuticals industry, it is ranked #17 of 220 stocks.

In total, we rate LLY on eight different levels. Beyond what we’ve stated above, we have also given LLY grades for Growth, Value, Sentiment, and Momentum. Get all the LLY ratings here.

Click here to checkout our Healthcare Sector Report for 2021

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PFE shares were trading at $43.93 per share on Monday morning, up $1.12 (+2.62%). Year-to-date, PFE has gained 22.93%, versus a 18.41% rise in the benchmark S&P 500 index during the same period.

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More…

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