Pharmaceutical Stocks: Solid Dividends, Great Growth Potentialhttp://www.fool.com/investing/etf/2013/11/06/pharmaceutical-stocks-solid-dividends-great-growth.aspx Selena Maranjian
November 6, 2013
Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some pharmaceutical stocks to your portfolio but don't have the time or expertise to hand-pick a few, the Market Vectors Pharmaceutical ETF (NYSEMKT: PPH) could save you a lot of trouble. Instead of trying to figure out which pharmaceutical stocks will perform best, you can use this ETF to invest in lots of them simultaneously.
Why pharmaceutical stocks?
More than a handful of pharmaceutical stocks had strong performances over the past year. Bristol-Myers Squibb (NYSE: BMY) surged 66%, and yields 2.7%. The company posted revenue up 9% in its last quarter (over year-ago levels), and topped analyst expectations. Its skin-cancer drug Yervoy has been performing well, and it recently reported promising results for its anti-PD-1 inhibitor nivolumab, that treats non-small cell lung cancer and for an arthritis drug, too. Meanwhile, Morgan Stanley gave Bristol-Myers Squibb stock a big boost, upgrading it and hiking its price target by 33%. Still, bears worry about patent expirations (which plague every pharma company) and don't like that its newly approved blood thinner, Eliquis, isn't selling too briskly.
AbbVie (NYSE: ABBV), split off from Abbott Laboratories, is trading near a 52-week high, up some 45% above its 52-week low. AbbVie offers investors a lot of good news and bad in its blockbuster rheumatoid arthritis drug, Humira. On the one hand, its sales are growing, generating about $11 billion annually, but its patent protection is due to expire in 2016. AbbVie's third-quarter report was solid, with several drugs experiencing double-digit sales gains, and a few moving in the opposite direction just as rapidly. Its pipeline is quite promising, especially in its efforts to combat hepatitis-C, and its stock yields 3.3%.
Other pharmaceutical stocks didn't do quite as well over the last year. Teva Pharmaceutical Industries (NYSE: TEVA), for example, shed 8%, and it yields 3%. Teva Pharmaceutical has some worried about the impending patent-protection expiration of its multiple sclerosis drug, Copaxone. Bulls would remind you, though, that it's still a major player in generic drugs, with more than 140 product registrations awaiting FDA approval. Its third quarter delivered revenue growth of 2%, and U.S. generic sales up 6%, but that got a bit overshadowed by news that its CEO is