Almost everyone likes underdogs. They are the ones who do not receive the respect they deserve but who often offer pleasant surprises.
Three Motley Fool contributors believe they have identified a handful of health actions who are the underdogs. Here's why you come Bristol-Myers Squibb (NYSE: BMY), Modern (NASDAQ:mRNA)and Pfizer (NYSE: PFE) as surprisingly underrated stocks to buy right now.
A Top Pharma Stock Trading at a Significant Discount
David Jagielski (Bristol Myers Squibb): There's no shortage of reasons for investors to be bearish about Bristol Myers Squibb. The major pharmaceutical company has a lot of debt on its books due to acquisitions, and there are concerns that its growth prospects are not as good as it loses exclusivity on several top drugs, including Eliquis and Opdivo.
However, with the stock down 17% in three years and trading at just 7 times its estimated forward earnings (based on analyst expectations), investors appear to be heavily discounting it right now. The good news is that at such a low valuation, the stock offers investors an attractive margin of safety in case its growth strategy doesn't live up to expectations.
BMS has been winning approvals for new drugs and turning to acquisitions to bolster its drug pipeline, but that hasn't been enough to convince investors that the company, which has been growing and innovating for decades, will be able to develop enough drugs. new. products to overcome current obstacles.
By 2026, the company projects its pipeline of new products will generate $10 billion in annual revenue. Unfortunately, this may not be enough comfort for investors, as Opdivo and Eliquis generated a combined annual revenue of $21 billion in 2023. Future losses from those products alone could offset any profits the company makes from the new products.
There is certainly some risk with Bristol Myers Squibb, but the company is not ignoring its challenges and is investing in innovating and growing its business. It may take some time to achieve solid gains, but with such a low valuation, the stock can become a potentially underrated investment to hold on to if you're willing to be patient and hold on for several years.
The reasons to like this stock are hiding in plain sight
Keith Speights (Moderna): It's no secret why Moderna's stock price has plummeted about 36% this year. The messenger RNA (mRNA) pioneer's revenue continues to decline. It posted another sizable net loss in the second quarter of 2024. To make matters worse, Moderna cuts its 2025 sales forecast and delays the development timeline for several new products.
But is Moderna underrated? I think so. Investors overlook the fact that the company's pipeline is full of promising programs. Moderna expects to obtain regulatory approvals for 10 new products over the next three years.
Two of those new products could be on the market relatively soon. Moderna expects to apply for approval of its next-generation COVID-19 vaccine and its combination flu and COVID vaccine this year.
Several key late-stage readouts are also on the way. Moderna should report Phase 3 results for the mRNA-1647 cytomegalovirus (CMV) vaccine by the end of the year. It is also on track to begin generating data later this year from pivotal studies of mRNA-3705 and mRNA-3927 targeting metabolic disorders, methylmalonic acidemia and propionic acidemia, respectively.
Moderna recently launched its respiratory syncytial virus (RSV) vaccine, mResvia, which should have huge commercial potential. The company plans to soon apply for U.S. approval to expand the vaccine's label to include high-risk adults ages 18 to 59.
Between 2026 and 2028, Moderna expects revenue growth of more than 25% annually thanks to its new products. Given that the stock is trading at a price-to-sales ratio of less than 4.9 (cheap for a biotech stock), I think Moderna could be a big winner going forward.
The crisis will not last forever
Prospero Junior Bakiny (Pfizer): It's no secret: Pfizer is not investors' favorite stock right now, and hasn't been for a while. Over the past two years, the company's financial results have been unimpressive, to say the least. Of course, that's only in comparison to previous years of the pandemic, including 2022, when Pfizer became the first pharmaceutical company to generate more than $100 billion in annual sales. The pharmaceutical company won't be back anytime soon at this point, but the market is seriously underestimating Pfizer's potential.
The company has significantly expanded its portfolio through internal development and acquisitions thanks to its pandemic-related work. Pfizer now has the means to develop important medicines in various therapeutic areas. Strengthened its position in oncology, goes after the promising GLP-1 weight loss marketand its vaccine portfolio is also promising. Pfizer has 113 programs in the pipeline, including six under review for approval.
While no drugmaker has a 100% success rate or close to that, Pfizer's pipeline is more than enough to transform its pipeline over the next five years. Meanwhile, the company's results will stabilize as the need for COVID-19 vaccines and medications becomes more predictable. I predict that Pfizer's revenue and earnings will eventually start moving in the right direction, as will its stock price. In fact, Pfizer's revenue grew in the second quarter, the first time it did so in a long time.
Pfizer has not fully recovered yet, far from it. But it would be a good idea to buy the company's stock before it does.
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David Jagielski has no position in any of the stocks mentioned. Keith Speights He has positions in Bristol Myers Squibb and Pfizer. Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Bristol Myers Squibb and Pfizer. The Motley Fool recommends Moderna. The Motley Fool has a disclosure policy.
3 Surprisingly Underrated Stocks to Buy Right Now was originally published by The Motley Fool