3 Surprisingly Undervalued Stocks to Buy Right Now

Almost everyone likes an underdog. They are the ones that don’t get the respect they deserve, but often provide pleasant surprises.

Three Motley Fool contributors believe they’ve identified a handful of healthcare stocks that are underdogs. Here’s why I see it Bristol Myers Squibb (BMY 1.58%), Modern (MRNA 2.85%)and Pfizer (PFE 0.41%) as surprisingly undervalued stocks to buy right now.

A top pharmaceutical stock deal at a significant discount

David Jagielski (Bristol Myers Squibb): There is no shortage of reasons for investors to feel bearish on Bristol Myers Squibb. The top drug company has a lot of debt from acquisitions, and there are concerns that its growth prospects won’t be as strong as it loses exclusivity for several top drugs, including Eliquis and Opdivo.

However, with the stock down 17% in three years and trading at just 7 times estimated future earnings (according to analysts’ expectations), investors appear to be very short right now. The good news is that at such a low valuation, the stock offers investors an attractive margin of safety should the growth strategy not meet its expectations.

BMS has won new drug approvals and turned to acquisitions to bolster its drug portfolio, but that hasn’t been enough to convince investors that the company — which has been growing and innovating for decades — will be able to develop enough new drugs. produced to overcome current headwinds.

By 2026, the company expects its new product portfolio to bring in $10 billion in annual revenue. Unfortunately, that may not be comfortable enough for investors, as Opdivo and Eliquis generated combined annual revenue of $21 billion in 2023. Future losses from these products could offset the gains the company makes from the new products.

There is undoubtedly some risk with Bristol Myers Squibb, but the company is not ignoring its challenges and is investing in innovation and growth of its business. It may take some time to make strong gains, but at such a low valuation, the stock can be a potentially undervalued investment to hang on to if you’re willing to be patient and hold out for several years.

The reasons why you love this stock are hiding in plain sight

Keith Speights (Modern): It’s no secret why Moderna’s share price is down nearly 36% this year. The messenger RNA (mRNA) pioneer’s revenue continues to decline. It posted another significant net loss in the second quarter of 2024. To make matters worse, Moderna is cutting its sales forecast for 2025 while pushing back the development timeline for several new products.

But is Moderna underrated? I think so. Investors overlook the fact that the company’s pipeline is loaded with promising programs. Moderna expects to win regulatory approvals for 10 new products over the next three years.

Two of these new products could be on the market relatively soon. Moderna expects to file for approval of its next-generation COVID-19 vaccine and its combined influenza/COVID vaccine this year.

Several key late-stage reads are also on the way. Moderna is expected to report Phase 3 results for cytomegalovirus (CMV) vaccine mRNA-1647 as early as the end of the year. It is also on track to begin generating data later this year from pivotal studies of mRNA-3705 and mRNA-3927 targeting the metabolic disorders methylmalonic acidemia and propionic acidemia, respectively.

Moderna recently launched its respiratory syncytial virus (RSV) vaccine mResvia, which should have huge commercial potential. The company plans to soon file for US approval to expand the vaccine’s label to include high-risk adults aged 18 to 59.

Between 2026 and 2028, Moderna expects revenue growth of more than 25% annually thanks to its new products. With the stock trading at a price-to-sales ratio below 4.9 (cheap for a biotech stock), I think Moderna could be a big winner going forward.

The crash won’t last forever

Prosper Junior Bakiny (Pfizer): It’s no secret: Pfizer isn’t investors’ favorite stock right now, and hasn’t been for some time. Over the past two years, the company’s financial results have failed to impress, to say the least. Of course, that’s only compared to previous years of the pandemic, including 2022, when Pfizer became the first pharmaceutical company to generate more than $100 billion in annual sales. The drugmaker won’t be returning to those heights anytime soon, but the market is severely underestimating Pfizer’s potential.

The company has significantly expanded its pipeline through internal development and acquisitions due to its pandemic-related work. Pfizer now has the means to develop important drugs in various therapeutic areas. It has strengthened its position in oncology, is targeting the promising GLP-1 slimming market, and its vaccine pipeline is also promising. Pfizer has 113 programs in development, including six under review for approval.

While no drugmaker has a 100% success rate or close to it, Pfizer’s pipeline is more than good enough to transform its lineup over the next five years. Meanwhile, the company’s results will stabilize as the need for vaccines and drugs against COVID-19 becomes more predictable. I predict that Pfizer’s revenue and earnings will eventually start moving in the right direction, as will its stock price. In fact, Pfizer’s revenue rose in the second quarter, the first time it has in a while.

Pfizer hasn’t fully recovered yet, not by much. But it would be a good idea to buy the company’s stock before they do.