Pharmaceutical stocks represent an interesting prospect — while it is incredibly tough to separate the wheat from the chaff, picking a winner early on is more or less a ticket to outsized returns.
There’s just one problem — most established pharmaceutical companies have mature business models in stable industries. While that’s perfectly fine in terms of stability, stocks like these rarely see big moves to the upside. Barring the recent surges seen from the advent of weight loss drugs like GLP-1 agonists, it’s tough to remember any notable shifts in the industry.
Still, we’re talking about quite a dynamic, competitive, and profitable industry — the urge to excel has never been higher. Finbold has selected three interesting pharmaceutical stocks — and while not all of them depend on breakthroughs and innovations, all three merit consideration.
Picks for you
Eli Lilly and Co. (NYSE: LLY)
Eli Lilly (NYSE: LLY) was one of the big beneficiaries of the weight-loss drug revolution. At the start of 2024, a single LLY share was trading hands at $626.03 — by the end of the year, prices had surged by 23.52%, up to $773.29 at press time.
The demand for weight loss drugs is only increasing — on top of that, new use cases for these medications seem to be popping up all the time. Eli Lilly has also increased its research and development (R&D) budget substantially — having spent as much as $9 billion for a single manufacturing facility in the United States.
Despite its impressive performance thus far, Wall Street remains bullish on Eli Lilly stock — of the 17 equity analysts who issue ratings for the stock, 15 rate it a ‘Buy’, while only 2 rate it a ‘Hold’. The average 12-month price forecast for the stock sits at $1,050 — a mark corresponding to a 35.89% upside.
Vertex Pharmaceuticals (NASDAQ: VRTX)
Vertex Pharmaceuticals (NASDAQ: VRTX) derives most of its revenue from treatments for cystic fibrosis. The sales of its current products are projected to remain strong in 2025 — however, the company is also diversifying its pipeline to include promising treatments in key areas such as gene editing, kidney disease, and pain management.
The company’s latest earnings report, covering Q3 2024, saw a significant earnings beat. Over the course of 2024, the price of Vertex stock has declined by 3.01% — at press time, it was trading at $408.23. While it saw significant gains throughout the year, disappointing trial results for the company’s non-opioid pain medication caused a severe selloff in late December.
Of the 26 Wall Street researchers who track the stock, 16 rate it a ‘Buy’, 9 rate it a ‘Hold’, and only 1 rates it a ‘Sell’. The average price target for VRTX stock sits at $515.11 — equating to a 26.15% upside from prices as of the time of writing.
As disappointing as the late-year drop was, Vertex maintains a promising pipeline — and if the company manages to successfully leverage its strong position in key treatments, it could see significant upside in 2025.
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