Pharmaceutical Stock To Avoid This Quarter
Quarantine these pharma stocks.
The pharmaceutical industry and pharma stocks have future potential to make gains and generate strong dividend payouts for investors. Although, the sector is currently experiencing turbulence that will cost investors in the short term.
After July it looked like the stock market were going to have a strong second half of the year. The optimism that investors shared on the market in July has now dissipated as global markets are experiencing broader selloffs. Last Friday the Dow Jones dropped almost 500 points, with nearly half of the S&P 500 stocks in a bear market. Pharmaceutical stocks provide investors with long-term safety… or at least that should be the case.
Big Pharma Challenges & Industry Declines
This year we have seen pharmaceutical companies follow a different pattern than in the past. The pharmaceutical industry as a whole is underperforming, this can be attributed to a few reasons. The biotechnology behind big pharma has improved, and so has the efficiency of the treatments. With efficiency increasing, less diseases are left for competing pharmaceutical companies to target. This is an issue that most pharmaceutical stocks are facing.
These are out analyst top picks of pharma stocks to avoid in the next quarter.
Allergan (NYSE: AGN)
Allergan stock is down 8 percent year-to-date. Most of Allergan share price losses have came in the past 10 weeks. Since the end of September, AGN stock has fell almost 22 percent.
The overall picture of Allergan is not attractive from an investors standpoint, the stock hasn’t moved in the last 5 years. For income-seeking investors, Allergan’s dividend yield is only 2%. Forecasted earnings per share for 2019 is at $16.43, which signifies that analysts expect little growth for the company.
Celgene ( NASDAQ: CELG)
Celgene is one of the worst performing Big Pharma stocks this year, Celgene stock price has fallen by 35 percent year-to-date. Despite seeing strong revenue growth and profitability, the company cannot attract investors. This is due to a few factors.
Firstly, Celgene has invested significant funds into research and development, which hurts its margins. These costs are now mandatory for pharma companies, which will impact all pharmaceutical stocks.
Amgen (NASDAQ: AMGN)
The pressures that the pharmaceutical industry are facing can be seen weighing down the biggest players in the industry. Amgen is not immune to the industry’s decline. For Amgen stock, the cause for concern lies within its annual sales growth, which has declined consistently in recent years.
An upside for Amgen stock is that it yields a 3% dividend.
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