The pharmaceuticals market has taken a bit of a breather in recent weeks after an exhilarating rally earlier this year. But seasoned investors know the ups and downs are part of the natural ebb and flow of the market, and that patience and discipline are rewarded in the long-run. While some Pharma sub-sectors such as vaccine stocks have been hit especially hard amidst the recent volatility, the future still remains bright for pharma companies with a diverse pipeline. I believe such pharma stocks will deliver outsized returns when sentiment improves.
Right now, the healthcare sector appears to be resilient, with several pharma stocks poised for massive gains ahead. Rather than chasing risky biotech startups, I’ll be focusing on proven industry leaders with strong growth drivers and upside catalysts on the horizon. These are pharma stocks that could potentially double your money over the next 12-24 months.
The pharma industry is a complex one, so you’d only want to own the highest quality companies with the most compelling pipelines. These are businesses with efficient operations, robust cash flows, and management teams with a track record of success. Of course, drug development is inherently risky, with no guarantees of clinical trial victories. So, spreading bets across multiple names is prudent.
With that said, here are three pharma stocks to look into right now.
Pfizer (PFE)
Pfizer (NASDAQ:PFE) stock is down nearly 45% from its early 2022 highs. While the company’s vaccine and therapeutic sales boom fueled by Covid-19 have faded, Pfizer’s underlying business remains rock solid. The company has an industry-leading drug pipeline and plans to launch up to 19 new products over the next 18-months.
Recent Q2 results showed the early impact of waning pandemic demand, with revenues sliding 54% year-over-year. But notably, sales from non-COVID products climbed 5% operationally. The company also reaffirmed guidance for 6-8% operational revenue growth this year, excluding its vaccine portfolio.
Pfizer possesses tremendous financial strength, with over $26 billion in 2022 in cash flow. The company leveraged its robust pandemic profits and balance sheet to acquire many other companies to reinforce growth during that period. Plus, the planned $43 billion takeover of Seagen (NASDAQ:SGEN) will further expand Pfizer’s presence in oncology.
While near-term results will remain pressured as high-margin Covid-related products roll off, Pfizer’s pipeline investments position it well for the long-run. The stock trades at just 10-times forward earnings, while paying a tasty 5% dividend yield. Value investors building a position at current levels will be rewarded handsomely over the next decade. Additionally, the consensus analyst price target at $45 implies 39% upside.
JD Health International (JDHIF)
Most U.S. investors are unfamiliar with this Chinese online retailer, JD Health (OTCMKTS:JDHIF). But the company is a hidden gem trading at a rock-bottom valuation, after the shellacking Chinese equities endured last year.
JD Health operates China’s largest online pharmacy and third-largest online medical platform. It sells pharmaceutical and healthcare products, provides online healthcare services like medical consultations, and manages its supply chain.
Fears over China’s economic slowdown and regulatory crackdowns have weighed on the stock over the past year. However JD Health continues to deliver rapid growth. The company’s Q4 revenue jumped 52.3% (excl. currency fluctuations), driven by a spike in active users. For the full year, the company gained over 31 million new annual active users. Profitability has also steadily improved, with gross margin hitting 21% in Q4.
Looking ahead, the Chinese government’s stimulus policies aimed at stabilizing the economy bode well for consumer spending and confidence. With the healthcare space still underpenetrated online, JD Health has an enormous runway for expansion. Consensus forecasts call for around 15% annual revenue growth over the next decade, with sales expected to reach $27 billion by 2033.
Trading at less than 2.3-times forward sales, JD Health is absurdly cheap. Amid China’s reopening, the stock appears well-positioned for substantial upside.
CRISPR Therapeutics (CRSP)
Rounding out the list, I will slip in CRISPR Therapeutics (NASDAQ:CRSP), as it still qualifies as a bio”pharma” stock. The company leverages a revolutionary gene editing technology called CRISPR. CRISPR Therapeutics is pioneering CRISPR/Cas9 gene editing therapies that have the potential to deliver functional cures for a wide array of genetic diseases.
The company’s lead pipeline candidate is CTX001, developed in partnership with Vertex Pharmaceuticals (NASDAQ:VRTX). CTX001 applies CRISPR technology to treat the blood disorders beta-thalassemia and sickle cell disease. Analysts peg peak sales for CTX001 above $2 billion. The company submitted the CTX001’s BLA, with a decision expected before year-end.
Furthermore, CRISPR Therapeutics boasts over $1.8 billion in cash to support its broad portfolio of preclinical and clinical programs. The most advanced is CTX110, an off-the-shelf CAR-T cell therapy for B-cell malignancies like lymphoma and leukemia. CRISPR Therapeutics is also making strides with in vivo gene editing approaches for common diseases like cardiovascular disease.
As treatments advance through the clinic, the sales potential is enormous, with estimates ranging from $1.3 billion to $5.4 billion in 2032 revenues for CRISPR Therapeutics. The company’s CRISPR/Cas9 platform is well-positioned to disrupt the biopharma industry. Investors buying the pullback can capitalize on the coming commercial launch. Thus, I believe the 83.4% upside potential is very much achievable in one year.
On the date of publication, Omor Ibne Ehsan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
