As the new year beckons, the pharmaceutical industry is poised for more developments, building on advances made in 2023. The industry harbors several companies leading the way in groundbreaking innovations, drug discoveries, pending approvals, and market advancements, an element likely to affect their stock price positively.
Indeed, some key players will likely stand out in 2024 as they are backed by critical fundamentals that are likely to drive their stocks to higher valuations. In this regard, Finbold has compiled the following two pharmaceutical stocks to watch in 2024.
AbbVie
AbbVie Inc. (NYSE: ABBV), the American biopharmaceutical company, is concluding the year with a robust performance, leveraging the overall momentum in the stock market and the potential impact of reduced interest rates in 2024. While the year-to-date (YTD) performance reflects a 4% decline, the stock has surged nearly 11% in the past month.
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Benefiting from the prospect of a favorable Federal Reserve policy, AbbVie is underpinned by critical fundamentals that constitute noteworthy developments, potentially influencing its stock trajectory. Notably, essential drugs in its pipeline and strategic acquisitions drive positive sentiment.
For instance, AbbVie has set its sights on acquiring ImmunoGen, a specialist in antibody-drug conjugates (ADCs) for cancer treatment. The strategic move aligns with AbbVie’s growth plan, focusing on ImmunoGen’s groundbreaking therapy, Elahere. Elahere’s unique approach targets cancer cells exclusively, offering the potential for substantial future revenue.
The acquisition aims for regulatory approval by 2024, providing a vital avenue for revenue diversification amid the impending patent expiration of AbbVie’s flagship drug, Humira, used in conditions like rheumatoid arthritis and plaque psoriasis.
In another significant development, AbbVie unveiled plans to acquire Cerevel Therapeutics, a neuroscience-focused biotech company, for $8.7 billion to solidify its product offering amid rising competition.
Overall, AbbVie has notably excelled in diversification, strategically steering its business away from dependency on Humira through successful launches of new immunology drugs Skyrizi and Rinvoq. This move effectively mitigates long-term risk for the company.
Furthermore, AbbVie recorded better-than-expected third-quarter earnings and revenue, an increase in its profit forecast for fiscal 2023. The company reported earnings of $2.95 per share from revenue totaling $13.93 billion. Notably, global revenue for Humira experienced a 36% decline from the previous year. However, the company’s immunology segment saw significant revenue gains of 52% for Skyrizi and 59% for Rinvoq.
Heading into 2024, Wall Street analysts are optimistic about AbbVie’s potential. According to TipRanks, 13 analysts have provided 12-month price targets based on the stock’s performance over the last three months. The consensus indicates an average price target of $171.58, signaling a 10.74% change from the current price.
Projections vary from a high of $197 to a low of $150. Among the 18 analysts, 13 recommend buying, while five suggest holding the stock, highlighting the overall positive sentiment surrounding AbbVie’s outlook.
Currently, ABBV stock is trading at $154 with 24-hour gains of over 1.5% as per the close of markets on Friday, December 22.
Novo Nordisk
Heading into the coming year, Novo Nordisk (NYSE: NVO) emerges as a possible choice for investors, driven by its robust pipeline featuring potential high revenue-generating drugs. With two drugs filed for diabetes, hemophilia, and others in various testing stages, Novo Nordisk stands out as a promising stock for consideration in 2024.
The company’s extensive portfolio in diabetes and weight loss drugs is expected to be a significant revenue driver. Additionally, the company is seeing a surge in demand for Wegovy, which has contributed significantly to its impressive financial performance. Notably, Wegovy has witnessed a surge in prescriptions, being an injectable weight-loss medication for adults with obesity or excess weight related to conditions.
In a strategic move, Novo Nordisk is investing in label expansions for its diabetes and obesity care drugs, exploring cardiovascular and other indications to boost sales. With plans to allocate $6 billion for expanding manufacturing capacity, the company is gearing up to meet the escalating demand for its sought-after drugs, Ozempic and Wegovy.
At the same time, the company’s foray into the acquisition and merger space is noteworthy as it seeks to establish a footprint in weight loss medication. For instance, Novo Nordisk recently acquired Inversago Pharma for up to $1.075 billion, focusing on CB1 receptor-based therapies for obesity, diabetes, and associated metabolic disorders.
As anticipation builds for positive stock movement in 2024, four Wall Street analysts have given Novo Nordisk a ‘strong buy’ rating. Recent analyses on TipRanks project an average price target of $116.67, with a high forecast of $120 and a low forecast of $115, representing a 13.59% change from the last price of $102.76 in the next 12 months.
At Friday’s market close, Novo Nordisk stock was trading at $102.71, reflecting a YTD gain of about 50%.
Considering all factors, it’s crucial to remember that projections can change due to fluctuating markets when examining the two stock forecasts.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
