In the last quarter, mega-cap drug companies dipped sharply. Gilead (NASDAQ:GILD), AbbVie (NYSE:ABBV), and GlaxoSmithKline (NYSE:GSK) are notable stocks trading at a discount. What happened to them recently?
Investors punished Gilead after its partner, Galapagos (NASDAQ:GLPG) said that the Food and Drug Administration requested more data for its rheumatoid arthritis drug, filgotinib. Markets also lost interest in Gilead’s antiviral that helps treat Covid-19 patients. Clinical data shows some benefit for remdesivir treatment but it is not convincing enough.
AbbVie quietly drifted from a $100 top to close recently below $90. At 8.6 times price-to-earnings, the dividend yield of 5.26% is compelling. AbbVie partnered with I-Mab for cancer treatment. It filed an application for its spine arthritis drug, upadacitinib, last month. And it exercised its license option for fibrotic diseases, with Morphic.
GSK held the $41 - $42 level throughout the spring and summer, only to fall recently to $39.
Markets are distracted by investing in Covid-1 vaccines, whereas GSK continues to win approvals in asthma and COPD treatment. On Sep 9., the FDA approved its Trelegy Ellipta drug. GSK shares pay a dividend that yields 4.83%.
Investors who waited for value in drug stocks may look at those three giants. The downtrend will end, eventually, rewarding patient investors.
