Valuation is crucial in investing, and there are times when certain stocks present exceptional value opportunities.
Three contributors from Motley Fool believe they have identified such stocks. They argue that Altimmune (ALT 0.17%), Moderna (MRNA 0.69%), and Pfizer (PFE 1.03%) are particularly undervalued, making them wise choices for investors seeking value stocks.
A Small Cap with Big Potential in GLP-1
David Jagielski (Altimmune): For those willing to take risks, Altimmune offers an intriguing investment opportunity in the GLP-1 weight loss drug market. While its GLP-1 candidate, pemvidutide, still needs to prove itself in late-stage trials, preliminary clinical results have been encouraging.
In a 48-week phase 2 study, participants who received the highest dose of pemvidutide lost an average of 15.6% of their body weight, comparable to other promising GLP-1 therapies. Additionally, the drug is being investigated for its potential to treat metabolic dysfunction-associated steatohepatitis (MASH), an often unnoticed liver condition.
Beyond Being a “Pandemic Stock”
Prosper Junior Bakiny (Moderna): The COVID-19 pandemic showcased the rapid development of mRNA vaccines, catapulting Moderna into the spotlight with its effective vaccine. However, following widespread vaccination, the company saw a steep decline in revenue and share value, losing 81% over the past three years and 68% in the last year alone.
Despite these setbacks, Moderna’s prospects remain promising. Although its revenue from the COVID-19 vaccine has decreased, ongoing booster shots for high-risk individuals still generate significant demand. Moreover, Moderna has made notable progress in other areas, including a successful vaccine for respiratory syncytial virus that recently passed phase 3 trials.
A Bargain in the Pharmaceutical Sector
Keith Speights (Pfizer): Pfizer’s forward price-to-earnings (P/E) ratio stands around 8.8, significantly below the pharmaceutical industry’s average of 18.7. This valuation could be justifiable if the company’s growth outlook were bleak. However, that’s not the case. While lower COVID-19 product sales have impacted revenue, Pfizer forecasts solid growth in the coming years.
Through strategic acquisitions, such as Biohaven for migraine drug Nurtec ODT and Seagen for cancer drug Padcev, Pfizer has bolstered its growth prospects. The company’s commitment to research and development has also resulted in new products like Elrexfio for multiple myeloma and the RSV vaccine Abrysvo. Additionally, Pfizer offers a forward dividend yield of 6.58%, providing potential for attractive total returns even with modest share price growth.
