Investing

These 3 Large-Cap Pharma Stocks Have Been Red-Hot

Derek Lewis

Published: August 22, 2023 10:46 pm

Large-cap pharmaceuticals have displayed relative strength over the last month, seeing notable buying pressure.

And three stocks from the realm – AbbVie ABBV, Novo Nordisk NVO, and Eli Lilly LLY – have been notably hot, all outperforming the S&P 500 handily during the period.

For those interested in riding the recent momentum, let’s take a closer look at how each currently stacks up.

AbbVie

AbbVie enjoys leadership positions in key therapeutic areas, including immunology, hematologic oncology, neuroscience, aesthetics, eye care, and women’s health.

The company’s shares were boosted following its latest quarterly print, as we can see illustrated in the chart below. The company posted a double-beat, exceeding the Zacks Consensus EPS Estimate by 4% and delivering revenue results modestly ahead of the consensus.

The company is a Dividend Aristocrat, reflecting its commitment to increasingly rewarding shareholders. ABBV shares currently yield a sizable 3.9% annually paired with a payout ratio sitting sustainably at 47% of the company’s earnings.

Novo Nordisk

Novo Nordisk is a global healthcare company and a leader in the worldwide diabetes market. Analysts have raised their expectations across several timeframes, with the trend particularly noteworthy for its current fiscal year.

It’s difficult to ignore the company’s growth profile, with earnings forecasted to soar 50% in its current fiscal year on 30% higher revenues. Peeking ahead to FY24, estimates allude to a further 15% earnings growth paired with a 12% sales bump.

The stock has a Growth Style Score of “A.”

Shares may not entice value-focused investors, with the current 35.2X forward earnings multiple well above the five-year median. Still, investors have had little issue forking up the premium given the company’s growth, with NVO shares up nearly 40% in 2023.

Eli Lilly

Eli Lilly recently raised its full-year 2023 guidance following its last quarterly release; LLY now expects annual revenue in the range of $33.4 – $33.9 billion (previously $31.2 – $31.7 billion) and adjusted earnings of $9.70 – $9.90 per share (previously $8.65 – $8.85).

Analysts have revised their earnings expectations rapidly across the board following the release, reflecting optimism.

Like NVO, Eli Lilly has big growth expectations, with earnings forecasted to see improvements of 20% and 35% in FY23 and FY24, respectively. Top line growth is robust, too, expected to climb 16% in FY23 and 17% in FY24.

And LLY shares provide a source of passive income, with shares currently yielding 0.8% annually. While the yield is on the lower end, the company’s 15% five-year annualized dividend growth rate helps to pick up the slack.

Bottom Line

Large-cap pharmaceuticals have enjoyed buying pressure over the last month, delivering outsized gains to investors.

And all three stocks above – AbbVie ABBV, Novo Nordisk NVO, and Eli Lilly LLY – have been leading the move higher, all outperforming the S&P 500 over the period.
Novo Nordisk A/S (NVO): Free Stock Analysis Report

Eli Lilly and Company (LLY): Free Stock Analysis Report

AbbVie Inc. (ABBV): Free Stock Analysis Report

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