The pharmaceutical industry is down even further than the energy sector in 2016, with several big pharma stocks trading low compared to their forward earnings. Two stocks that are trading far lower with bright future prospects include:
1. Allergan (AGN)
Allergan stock is down over 20% from a year ago and is trading at $235.94 a share. The company’s stock suffered in the beginning of April through May after a failed merger with Pfizer (PFE).
The failed merger hurt investor sentiment, but the company is on a path to reach its highest rivals in the next decade.
Allergan’s revenues are up 585% since 2013 after the company on a spending spree, with expenditures of $17+ billion in the last twelve months. The company’s stock is trading at 16 times its earnings estimates for the year.
The company announced last Tuesday that the FDA accepted its NDA filing for Oxymetazoline HCI Cream.
2. Pfizer (PFE)
Pfizer was part of the failed merger with Allergan, but the company is a dividend powerhouse. The company offers a 3.6% dividend yield, and its future looks bright, with a wide range of medicines in the company’s portfolio.
Ibrance, the company’s breast cancer therapy drug, reached $414 million in sales during Q1 2016.
The company is different from Allergan because it has not diluted its shares to make acquisitions. The company has used its cash reserves to make smaller purchases, with the most recent being the acquisition of Anacor Pharmaceuticals in a $5.2 billion deal.
Pfizer stock is trading at 14 times its earnings estimates for the year and is recovering from its failed merger attempt with Allergan.
Last Monday, news that the EU lifted a suicide warning on the company’s smoking cessation pill pushed the company’s stock up 0.5%.
