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Proprietary Data Insights Financial Pros’ Top Drug Delivery Stock Searches in the Last Month
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Experts Top 5 Drug Delivery Stocks
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Our readers are always on the lookout for unique investment ideas. So, when we recently became acquainted with IntelGenx (IGXT), our eyes opened to the potential of drug delivery systems. Most of us rarely think about how we take medication. It’s either swallowed or injected. However, there’s much more going on than you probably realize. For example, millions, yes millions of adults, struggle to take pills every year. Children…forget about it. IntelGenx is trying to change the game with its dissolvable oral films that act like Listerine strips. This idea struck us as so unique that we wanted to see what other companies were out there working on solving these problems. And according to our TrackStar data, Thermo Fisher Scientific (TMO) is at the top of that list. Thermo Fisher Scientific’s Business Thermo Fisher Scientific, or TMO, is a global leader in serving science, with a mission to enable its customers to make the world healthier, cleaner, and safer. The company’s unique value proposition lies in its innovative technologies, purchasing convenience, and pharmaceutical services. With a presence in over 50 countries and annual revenue surpassing $40 billion, TMO has established itself as a force to be reckoned with in the scientific community. TMO offers a comprehensive range of products and services catering to a diverse customer base, including pharmaceutical and biotech companies, hospitals, clinical diagnostic labs, universities, research institutions, government agencies, and environmental and industrial settings. The company’s offerings span life sciences solutions, analytical instruments, specialty diagnostics, and laboratory products, providing a one-stop-shop for all your laboratory needs. To better understand TMO’s operations, let’s break down its business segments:
Interestingly, TMO is also making significant strides in developing and manufacturing drug delivery systems, particularly subcutaneous solid implants. These implants offer several advantages over traditional oral dosage forms, including targeted drug delivery, reduced dosing frequency, and the potential use of biodegradable materials. Financials
Source: Stock Analysis 2023 was one of the first years TMO has seen revenues drop in nearly a decade. Like many healthcare companies, the boost in sales for Covid products waned as the pandemic faded. In Q1 2024, TMO reported revenue of $10.34 billion, with GAAP diluted earnings per share (EPS) increasing 4% to $3.46. Despite launching innovative products like the Thermo Scientific Dionex Inuvion Ion Chromatography system, revenue was slightly lower compared to the previous year, indicating a decline in core organic revenue growth. The company’s focus on high-impact, innovative products and expansion in high-growth markets is anticipated to drive its growth trajectory in 2024 and beyond, although slower economic recovery in China and competitive pressures could pose challenges. The company carries $36 billion in debt, which grew from $22 billion in 2021 due to the acquisition of PPD Inc. Overall, operating cash flows are double what they were prepandemic, allowing for share buybacks of $3 billion per year on top of a $500 million dividend. Valuation
Source: Seeking Alpha TMO is cheaper than it has been in several years as its revenues appear to have stalled. However, this appears to be a broader problem as Danaher (DHR) and Mettler Toledo (MTD) both trade at depressed price-to-cash flow multiples. Growth
Source: Seeking Alpha Unsurprisingly, the forward revenue outlook across the board is bleak. Only Becton Dickinson and Company (BDX) and West Pharmaceutical Services (WST) expect measurable growth. Yet, their forecasts don’t even reach 5%. Additionally, free cash flow growth appears to have stalled or reversed for everyone on this list. Profitability
Source: Seeking Alpha Thankfully, all the companies listed boast decent margins from gross down through free cash flow. However, the lower returns on assets and total capital, especially for TMO, support the sour outlook.
Our Opinion 5/10 We don’t see enough value in TMO to warrant stepping in right now. The stock trades in line with its 5-year averages on most valuation measures, if not slightly higher. With a lowered sales forecast, we would wait until Covid sales settle out and management issues a more upbeat outlook. |
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