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7 Pharmaceutical Stocks to Buy For a Healthy Portfolio in 2022

Posted on Friday, October 8th, 2021 by MarketBeat Staff
7 Pharmaceutical Stocks to Buy For a Healthy Portfolio in 2022One year ago, investors expected 2021 to be a huge year for pharmaceutical stocks. The bullish perspective was that as vaccines rolled out and the economy reopened, investors would shift from biotech stocks to traditional pharmaceutical stocks.

But the Delta variant has kept Covid-19 top of mind for many investors. While it’s true that some pharmaceutical stocks were part of the vaccine race, other players in the space have not performed as well as was hoped. Case in point, as of October 6, 2021, the iShares U.S. Pharmaceuticals ETF (NYSEARCA:IHE) is up only 9.7% in the last 12 months. And if you bought shares of the fund at the beginning of the year, you have no growth to show for your patience.

There are reasons beyond Covid-19 to consider when assessing the disappointing performance of pharmaceutical stocks. One is the current political climate which is making no secret of its desire to reshape the healthcare industry. And it has the pricing practices of “big pharma” firmly in its crosshairs.

However, the pharmaceutical sector is still loaded with quality stocks for investors who are willing to accept the inherent risk. And that’s the focus of this special presentation. In the next few minutes, we’ll take a look at seven pharmaceutical stocks that are ready to make strong moves forward in 2022.

#1 - Merck (NYSE:MRK)

Merck & Co., Inc. logo

One of the biggest stories in the pharmaceutical sector was the announcement that Merck (NYSE: MRK) was able to report stellar results on a late-stage study for its Covid-19 therapy, molnupiravir. The pill, which the company developed in partnership with Ridgeback Biotherapeutics, is likely to be a huge commercial success should it receive emergency use authorization.

This is igniting an intense debate over whether a safe and effective pill to treat Covid-19 symptoms will render vaccination efforts obsolete. For investors looking to 2022, I believe a “both/and” approach is warranted.

MRK stock gapped up nearly 10% on the announcement. But the stock is giving up some of those gains. The consensus opinion for MRK stock forecasts a 15% gain. But recent opinions that have been issued since the announcement of its Covid-19 pill suggest the stock could have even further to climb. Plus, the company reports earnings at the end of October and the stock may receive further upgrades in advance of, and immediately following the report.

About Merck & Co., Inc.
Merck & Co, Inc engages in the provision of health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products. It operates through the following segments: Pharmaceutical, Animal Health, and Other. The Pharmaceutical segment includes human health pharmaceutical and vaccine products.Read More 

Current Price: $81.59
Consensus Rating: Buy
Ratings Breakdown: 8 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $93.42 (14.5% Upside)


#2 - Pfizer (NYSE:PFE)

Pfizer logo

There’s been some speculation about why Pfizer (NYSE: PFE) stock is not soaring. The company along with BioNTech (NASDAQ: BNTX) was the first to receive Emergency Use Authorization (EUA) for its Covid-19 vaccine, Comirnaty. And it was also the first to receive FDA approval as well. This is the best evidence of Pfizer’s purposeful shift into the biopharma space paying off.

However, there’s much more to like about Pfizer than the revenue that Comirnaty will deliver for the company in 2022 and perhaps beyond. To begin with, Pfizer is said to be in the process of developing its own Covid-19 pill to compete with Merck. However, it goes far beyond that. The company has several oncology drugs, headlined by Ibrance, and an anticoagulant, Eliquis, that are showing year-over-year revenue growth. And the company has one of the most robust pipelines in the industry. Of the company’s 100 “discovery projects,” 23 are in late-stage (Phase 3) studies.

With any pharmaceutical stocks, investors should be looking for multiple revenue streams. And in that context, Pfizer is delivering in ways that set it apart from other stocks in the sector.

About Pfizer
Pfizer Inc is a research-based global biopharmaceutical company. It engages in the discovery, development, manufacture, marketing, sales and distribution of biopharmaceutical products worldwide. The firm work across developed and emerging markets to advance wellness, prevention, treatments and cures that challenge the most feared diseases.Read More 

Current Price: $42.94
Consensus Rating: Hold
Ratings Breakdown: 2 Buy Ratings, 9 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $44.00 (2.5% Upside)


#3 - AstraZeneca (NASDAQ:AZN)

AstraZeneca logo

In the introduction to this article, I suggested that oncology and diabetes would be two of the key drivers of pharmaceutical stock growth. And those are the two sectors that make the case for AstraZeneca (NASDAQ: AZN).

In its most recent earnings report, AstraZeneca posted $6.4 billion in sales of its oncology products. That represented a 19% year-over-year increase. And two of the company’s drugs have patents that will remain in effect until 2030. That’s a key metric to use when evaluating a pharmaceutical stock because it keeps the field free of competitors.

On the diabetes front, the company saw its lead drug, Farxiga, deliver $1.4 billion in revenue which was 60% higher than the previous year.

It was results like these that investors were expecting throughout the pharmaceutical sector. If AstraZeneca is any indicator it may simply have been a case of patience being rewarded.  And if the company begins to see the growth it expects from its recent acquisition of Alexion Pharmaceuticals the future will look very bright for AZN stock.

About AstraZeneca
AstraZeneca Plc is a holding company, which engages in the research, development, and manufacture of pharmaceutical products. Its pipeline are used for the following therapy areas: oncology, cardiovascular, renal, metabolism, and respiratory. The company was founded on June 17, 1992 and is headquartered in Cambridge, the United Kingdom.

Current Price: $61.67
Consensus Rating: Buy
Ratings Breakdown: 11 Buy Ratings, 2 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $124.00 (101.1% Upside)


#4 - Johnson & Johnson (NYSE:JNJ)

Johnson & Johnson logo

No list of pharmaceutical stocks would seem complete without Johnson & Johnson (NYSE: JNJ) on the list. Like Pfizer, JNJ was one of the big winners in the Covid-19 vaccine race. And one of the recent news items driving the stock is the company’s application to provide booster shots for its vaccine. A decision is expected later in October.

This could be the catalyst that JNJ stock needs to break it out of the doldrums. So far, the stock is flat in 2021. However, JNJ stock is trading in the middle of its 52-week range and analysts give the stock a 20% upside from its current level.

Of course, Johnson & Johnson also has a number of its products currently in the market. And investors shouldn’t forget that Johnson & Johnson is part of the elite Dividend Kings club. The company has increased its dividend every year for the last 59 years. And currently, it sports a dividend yield of 2.67%.

About Johnson & Johnson
Johnson & Johnson is a holding company, which engages in the research and development, manufacture and sale of products in the health care field. It operates through the following segments: Consumer Health, Pharmaceutical, and Medical Devices. The Consumer Health segment includes products used in the baby care, oral care, beauty, over-the-counter pharmaceutical, women's health, and wound care markets.Read More 

Current Price: $163.99
Consensus Rating: Buy
Ratings Breakdown: 6 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $189.75 (15.7% Upside)


#5 - AbbVie (NYSE:ABBV)

AbbVie logo

The story of AbbVie (NYSE: ABBV) in 2020 and 2021 has revolved around its signature anti-inflammatory drug, Humira. The company was due to see its patents expire for the drug which would invite generic competition into the market. With those expirations looming, the company purchased Allergan for $63 billion to help expand the company’s portfolio.

However, it’s not like AbbVie’s cupboard was dry. The company is projecting continued growth from its immunology drugs, Skyrizi and Rinvoq which the company believes could deliver $15 billion in revenue by 2025.

And AbbVie has an impressive pipeline that ensures that, at some point, the company will have other drugs that will continue to deliver revenue.

ABBV stock has a consensus price target of $126.16 which is a 15% upside from its current level. But as with JNJ, you can’t overlook AbbVie’s dividend. The company has increased its dividend for 49 years which means that next year it will likely be joining the elite group of Dividend Kings.

About AbbVie
AbbVie, Inc is a research-based biopharmaceutical company, which engages in the development and sale of pharmaceutical products. It focuses on treating conditions such as chronic autoimmune diseases in rheumatology, gastroenterology, and dermatology; oncology, including blood cancers; virology, including hepatitis C virus (HCV) and human immunodeficiency virus (HIV); neurological disorders, such as Parkinson's disease; metabolic diseases, comprising thyroid disease and complications associated with cystic fibrosis; pain associated with endometriosis; and other serious health conditions.Read More 

Current Price: $108.70
Consensus Rating: Buy
Ratings Breakdown: 12 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $126.67 (16.5% Upside)


#6 - Dynavax Technologies (NASDAQ:DVAX)

Dynavax Technologies logo

To this point, I’ve focused your attention on what is known as the Big Pharma stocks. In the interest of trying to provide something for every investor, my last two picks are more on the speculative side. The first is Dynavax Technologies (NASDAQ: DVAX). The company discovers and develops novel products to prevent and treat infectious and inflammatory diseases.

That would seem to make the company a participant in the Covid-19 field. And sure enough, Dynavax is partnering with a French company, Valneva, on a Covid-19 vaccine. As the Delta variant and overall vaccine hesitancy are showing, there will be more vaccines developed. While it’s true that Valneva’s supply agreement with the UK was recently terminated, Dynavax says it still has supply contracts valued between $300 to $400 million in 2021.

As of this writing, short interest is over 20% on DVAX stock. But institutional ownership is over 70%. The stock is currently trading near its 52-week high as well as the consensus price target of analysts.

About Dynavax Technologies
Dynavax Technologies Corp. operates as a biopharmaceutical company, which engages in the discovery, development, and commercialization of novel vaccines and immuno-oncology therapeutics. Its product includes HEPLISAV-B, which prevents infection caused by all known subtypes of hepatitis B virus in adults 18 years of age and older.Read More 

Current Price: $19.03
Consensus Rating: Buy
Ratings Breakdown: 2 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $21.00 (10.4% Upside)


#7 - Xenon Pharmaceuticals (XENE) (NASDAQ:XENE)

Xenon Pharmaceuticals logo

Could I interest you in a stock that gapped up nearly 100% at one point in 2021? That was the case with Xenon Pharmaceuticals (NASDAQ: XENE) that made a substantial move after announcing positive mid-stage clinical trial results for its drug candidate designed to treat adult patients with focal epilepsy.

The drug, XEN1101 is part of what is being considered the “next generation” of epilepsy drugs. And the key is that these drugs are expected to deliver improved effectiveness with fewer side effects that are common with current epilepsy drugs.

It’s not wise to chase a stock that nearly doubled in so short a period of time. And Xenon is a low revenue company that has never seen its stock climb to this level since it went public in 2014. If you don’t currently have a position in XENE stock, you might wait until after the company delivers earnings in early November. This will give investors a better line of sight of when the company will be ready to bring XEN1101 to market.

About Xenon Pharmaceuticals
Xenon Pharmaceuticals, Inc is a clinical stage biopharmaceutical company. It develops therapeutics to improve the lives of patients with neurological disorders, including rare central nervous system (CNS) conditions. The company's products include XEN496, XEN1101, XEN901 and XEN007. Xenon Pharmaceuticals was founded by Simon Neil Pimstone, Johannes J.Read More 

Current Price: $30.90
Consensus Rating: Buy
Ratings Breakdown: 4 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $40.33 (30.5% Upside)

 

In investing, catching a hot stock can be intoxicating, but it’s usually best to take the long view. As more becomes known about the novel coronavirus, science is adapting – which is what science does. The reality of Covid-19 is becoming one of a virus that will need to be managed as opposed to eradicated. The good news is that managing illnesses falls into the pharmaceutical sector’s wheelhouse. And there are companies that are working to do just that.

This is a story that will play out over a long time. And several of the companies in this presentation will be among the leaders in making that happen.

But one of the appealing features of investing in the pharmaceutical sector is that investors can find value in other areas. For example, in 2022, there are likely to be breakthroughs in areas like oncology and diabetes. Those will provide additional catalysts for pharmaceutical stocks some of which we’ve listed here as well.

7 Stocks to Buy Now and Avoid a Summer Swoon

Summer is generally a quiet time in the markets. Institutional investors, generally speaking, take some time away. In fact, that’s where the idiom “Sell in May and Go Away” comes from.

But quiet doesn’t mean uneventful. The world still moves along even in the lazy months of summer. And at the moment, there are two conflicting views driving the market.

One is the fear that everything’s a bubble that is just about to burst. We don’t recommend you get out of stocks, but let’s face it, things are more than just a little frothy.

But there’s another view summarized by the acronym, YOLO (as in You Only Live Once). And these investors are committed to keeping the markets going higher. Even if it means going “all in” (whatever that means to them) on risky asset classes like NFTs or Dogecoin.

We sincerely hope you take time to recharge (whatever that means to you) this summer. Whatever your personal beliefs, the reopening of our economy is a moment that deserves to be celebrated by all of us. But before you do, we recommend that you take a peek at these seven stocks that you can consider adding to your portfolio before you check out for the summer. These are likely to get as hot as a firecracker on the Fourth of July and should have you smiling when the summer ends.

View the "7 Stocks to Buy Now and Avoid a Summer Swoon" Here.





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