To The Moon

As of press time, $Bristol-Myers Squibb(BMY)$ YTD rose 18.99%, $Merck(MRK)$ rose 18.76%, $Amgen(AMGN)$ YTD 10.79% in 2022.

Inflation affects businesses a lot.

Walmart released report that due to the impact of inflation, its Q2 earnings would drop by 13-14%, and its full-year earnings would drop by 11-13%. Walmart stock fell sharply after the news.

Even Walmart said same-store sales actually increased by 6% in the Q2, but under inflation, people are spending more on staples and groceries, and fewer people are buying high-priced /big items. And higher-priced items are obviously more profitable than food and consumer staples, so while Walmart's sales have increased, profits have fallen a lot.

Affected by this news, the stocks of retail stores such as $Amazon.com(AMZN)$ , $Target(TGT)$ , and $Costco(COST)$ also fell, and they should all have similar problems. Shares fell as inflation got higher.

The impact of inflation on people's purchase of large items also affects automobiles, electrical appliances, clothes, furniture and other fields, as well as tourism, hotels, and restaurants. So stocks in these industries should all be affected next.

Few industries are immune to high inflation. below the chart shows the performance of stocks in various sectors of the S&P 500 from the beginning of the year to the present.

Data from finviz.com

The best sector this year is of course the energy sector, which has benefited from a sharp rise in oil prices. Then is military industry, which obviously benefited from the Russian-Ukrainian war.

Then the large pharmaceutical companies, for like $Merck(MRK)$,$Bristol-Myers Squibb(BMY)$, $Johnson & Johnson(JNJ)$, $Amgen(AMGN)$, these companies have patent-protected Exclusive products have strong control over the selling price of the drugs they produce, and they can pass on the effects of inflation to consumers.

Referring to the chart below, it is really encouraging that above pharmaceutical stocks maintaining positive returns despite a sharp pullback in the overall U.S. stock market in 2022, including a 20% drop in the drug industry.

As of press time, $Bristol-Myers Squibb(BMY)$ YTD rose 18.99%, $Merck(MRK)$ rose 18.76%, $Amgen(AMGN)$ YTD 10.79%.

Among the three industries that perform better, only pharmaceutical companies can really control the prices of their products, and are less affected by the general economic environment. Their stock dividends are also good, and the good performance of these big pharma companies is likely to continue.

So Let's take a detailed look at the fundamentals and financial reports of these three companies:

1. $Merck(MRK)$

Fundamentals: 

Merck & Co. is a $240 billion market cap pharmaceutical titan with offerings in areas such as oncology, vaccines, infectious diseases, diabetes, and beyond, it's stock has climbed over 20% in 2022. 

Acroding to public information, its cancer-fighting drug Keytruda sales climbed 23% in Q1 which account for around 30% of total Q1 revenue; It's animal health segment climbed 4% in Q1; Covid-19 antiviral pill known as Lagevrio (molnupiravir) continued to shine as it competes against a similar offering from Pfizer.

The firm is continuing to make acquisitions, Merck & Co is in advanced talks to buy Seagen (SGEN.US) for more than $200 per share. The deal, valued at about $40 billion or more, could close on or before Merck & Co. reports its second-quarter results on July 28. Merck also bolstered its long-term portfolio last November when it bought Acceleron Pharma for roughly $11.5 billion.

Recent Growth and Outlook: 

Merck’s revenue climbed 6% in 2020 and 17% in 2021.

Current Zacks estimates call for its revenue to pop another 16% in FY22 to hit $58.10 billion. Meanwhile, its adjusted earnings surged 33% last year, with it projected to jump 21% in FY22 to come in at $7.31 per share.

Peeking ahead, both its top and bottom lines are projected to pullback slightly (dip -2% YoY) in 2023 as Merck comes up against difficult to compete against periods.

On the positive side, Merck Q1 raised its 2022 revenue and earnings guidance, with its upward earnings revisions helping MRK land a Zacks Rank #1 (Strong Buy) right now, and MRK has an average analyst ranking of Strong Buy with an average price target of $97.75.

Even though Merck is trading right around fresh highs, its valuation levels are enticing. MRK trades at 12.9X forward 12-month earnings at the moment, good enough for a 27% discount to its own five-year highs and 13% value compared to its industry’s current average. Merck is even trading 8% beneath its five-year median.

2. $Bristol-Myers Squibb(BMY)$

Foundamentals: 

Bristol-Myers Squibb Company BMY is scheduled to report second-quarter 2022 results on Jul 27, before market open. The company’s shares have gained 18% in the year so far against the industry's decline of 21.6%.

Bristol-Myers beat earnings estimates in all of the last four quarters, the average surprise being 2.36%. In the Q1, the company beat earnings by 2.08%.

Bristol-Myers posted 11% growth in Total In-line Product Revenues in the previous quarter, and demand is likely to have improved in the second quarter. Blood thinner drug, Eliquis, was one of the top revenue generators in the last reported quarter and posted revenue growth of 11% year over year. The solid performance of the drug is likely to have continued in the to-be-reported quarter, driven by market share increases. 

The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Big news for the company: 

1. The National Institute for Health and Care Excellence (NICE) has published final draft guidance recommending a potentially life-extending treatment for a rare form of lung cancer. Opdivo has been recommended in NICE’s draft final appraisal document as a first-line treatment option for untreated, unresectable malignant pleural mesothelioma in adults. Both treatments are made by Bristol Myers Squibb.

2. Bristol Myers Squibb (NYSE: BMY) announced on July 22nd that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) has recommended approval of the fixed-dose combination of nivolumab and relatlimab for the first-line treatment of advanced (unresectable or metastatic) melanoma in adults and adolescents 12 years of age and older with tumor cell PD-L1 expression < 1%. The European Commission (EC), which has the authority to approve medicines for the European Union (EU), will now review the CHMP opinion.

3.Bristol Myers will acquire clinical-stage precision oncology company Turning Point Therapeutics TPTX for $76.00 per share, which equates to a total transaction value of $4.1 billion. The offer price of $76 represents a 122% premium to Turning Point’s closing price of $34.16 on Jun 2. The acquisition is expected to close in the ongoing quarter.

3. $Amgen(AMGN)$

Foundamentals：

This world's largest biotech drugmaker has an established record of topping earnings estimates, especially when looking at the previous two reports. The company boasts an average surprise for the past two quarters of 3.01%.

For the most recent quarter, Amgen was expected to post earnings of $4.22 per share, but it reported $4.25 per share instead, representing a surprise of 0.71%. For the previous quarter, the consensus estimate was $4.14 per share, while it actually produced $4.36 per share, a surprise of 5.31%. Amgen had a return on equity of 165.95% and a net margin of 21.75%. The business had revenue of $6.24 billion for the quarter, compared to analysts' expectations of $6.09 billion.

Institutional Attitute：

Shares of Amgen Inc. (NASDAQ:AMGN - Get Rating) have been assigned an average recommendation of "Hold" from the seventeen analysts that are covering the firm, Marketbeat reports.

Piper Sandler raised their price target on Amgen from $255.00 to $260.00 in a research report on Thursday, April 28th.

Oppenheimer reissued an "outperform" rating and issued a $290.00 target price on shares of Amgen in a report on Friday, June 24th.

BMO Capital Markets cut their price objective on Amgen from $263.00 to $243.00 in a report on Thursday, April 28th.

Morgan Stanley lifted their target price on Amgen from $239.00 to $253.00 and gave the company an "equal weight" rating in a research report on Friday, July 15th.

Finally, StockNews.com upgraded Amgen from a "buy" rating to a "strong-buy" rating in a research report on Monday, May 16th.

Institution Holdings, data from nasdaq

Other hedge funds have also recently bought and sold shares of the company. Dixon Hughes Goodman Wealth Advisors LLC grew its holdings in Amgen by 905.2% during the first quarter.

May knowing the company's fundamentals will help you determine if the long term shareholder return has matched the performance of the underlying business.

Question For You:

Please Share what else Pharmaceutical Stocks you are interested in ?