The stock market has been on a tear in 2023, with the S&P 500 index reaching new highs. However, some investors may be looking for more growth potential in the next year, especially in the sectors that are poised to benefit from the emerging trends and innovations. Here are three growth stocks that could skyrocket in 2024, according to three Fool.com contributors. They are AbbVie (NYSE: ABBV), Eli Lilly (NYSE: LLY), and Vertex Pharmaceuticals (NASDAQ: VRTX).
AbbVie: A Biotech Behemoth with a Diversified Portfolio
AbbVie is a biotech behemoth that is best known for its blockbuster immunology drug Humira, which treats various inflammatory diseases such as rheumatoid arthritis, psoriasis, and Crohn’s disease. Humira is the world’s best-selling drug, generating over $20 billion in annual revenue for AbbVie. However, Humira is facing increasing competition from biosimilars, which are cheaper versions of biologic drugs, as it has lost patent protection in some markets.
However, AbbVie is not a one-trick pony. The company has a diversified portfolio of drugs and a robust pipeline of candidates that can offset the decline of Humira and drive its future growth. Some of the key growth drivers for AbbVie are:
- Skyrizi and Rinvoq: These are two newer immunology drugs that AbbVie launched in 2019, and they have been growing rapidly since then. Skyrizi treats moderate to severe plaque psoriasis, while Rinvoq treats rheumatoid arthritis and other inflammatory conditions. In the third quarter of 2023, Skyrizi and Rinvoq generated $2.3 billion and $1.6 billion in revenue, respectively, up 58% and 79% year over year. AbbVie recently raised its sales guidance for these two drugs, expecting them to reach $27 billion in combined annual revenue by 2027, up from the previous estimate of $21 billion.
- Botox and Juvederm: These are two leading aesthetic products that AbbVie acquired from Allergan in 2020, and they have been boosting AbbVie’s revenue and margins. Botox is a neurotoxin that reduces wrinkles and treats various medical conditions, such as chronic migraines, overactive bladder, and excessive sweating. Juvederm is a dermal filler that adds volume and smooths lines on the face. In the third quarter of 2023, Botox and Juvederm generated $1.2 billion and $584 million in revenue, respectively, up 32% and 51% year over year.
- Imbruvica and Venclexta: These are two oncology drugs that AbbVie co-markets with Johnson & Johnson and Roche, respectively, and they have been expanding their market share and indications. Imbruvica treats various types of blood cancers, such as chronic lymphocytic leukemia, mantle cell lymphoma, and Waldenstrom’s macroglobulinemia. Venclexta treats chronic lymphocytic leukemia, acute myeloid leukemia, and multiple myeloma. In the third quarter of 2023, Imbruvica and Venclexta generated $1.4 billion and $549 million in revenue, respectively, up 9% and 37% year over year.
AbbVie also has several promising candidates in its pipeline, such as ABBV-951 for Parkinson’s disease, ABBV-8E12 for Alzheimer’s disease, and ABBV-3373 for rheumatoid arthritis. The company expects to launch 18 new products or indications by 2027, which could generate over $35 billion in peak sales.
AbbVie is not only a growth stock, but also a dividend stock. The company has raised its dividend for 49 consecutive years, and currently pays a quarterly dividend of $1.40 per share, which translates to a yield of 3.1%. AbbVie also generates strong cash flow, with $16.8 billion in free cash flow in the first nine months of 2023, up 19% year over year.
AbbVie’s stock is trading at a bargain valuation, with a forward price-to-earnings ratio of only 8.6, well below the industry average of 15.4. The stock is also up 23% year to date, outperforming the S&P 500. With its diversified portfolio, robust pipeline, generous dividend, and attractive valuation, AbbVie is a magnificent growth stock to buy right now and hold for the long term.
Eli Lilly: A Pharma Leader with a Focus on Innovation
Eli Lilly is a pharma leader that has a strong presence in several therapeutic areas, such as diabetes, oncology, immunology, neuroscience, and pain. The company has a history of innovation and excellence, and has delivered impressive growth and returns for its shareholders. Some of the reasons to buy Eli Lilly are:
- Trulicity and Jardiance: These are two blockbuster diabetes drugs that Eli Lilly markets, and they have been growing steadily in sales and market share. Trulicity is a once-weekly injectable drug that lowers blood sugar and reduces the risk of cardiovascular events, such as heart attack and stroke. Jardiance is a once-daily oral drug that lowers blood sugar and also reduces the risk of cardiovascular and kidney complications. In the third quarter of 2023, Trulicity and Jardiance generated $1.6 billion and $927 million in revenue, respectively, up 16% and 29% year over year. Eli Lilly is also developing new formulations and combinations of these drugs, such as tirzepatide, a dual glucose-dependent insulinotropic polypeptide and glucagon-like peptide-1 receptor agonist, which has shown superior efficacy and safety in late-stage trials.
- Verzenio and Retevmo: These are two oncology drugs that Eli Lilly launched in 2017 and 2020, respectively, and they have been gaining traction and approvals in various markets and indications. Verzenio treats hormone receptor-positive, human epidermal growth factor receptor 2-negative advanced or metastatic breast cancer, and has shown superior survival outcomes compared to other drugs in the same class. Retevmo treats advanced or metastatic non-small cell lung cancer, medullary thyroid cancer, and other types of thyroid cancer, and has shown impressive response rates and durability in patients with specific genetic mutations. In the third quarter of 2023, Verzenio and Retevmo generated $948 million and $151 million in revenue, respectively, up 50% and 79% year over year.
- Donanemab and Tirzepatide: These are two potential blockbuster drugs that Eli Lilly is developing, and they could be game-changers in their respective fields. Donanemab is a monoclonal antibody that targets a modified form of amyloid beta, a protein that accumulates in the brains of Alzheimer’s disease patients and causes cognitive decline. Donanemab has shown positive results in a phase 2 trial, where it slowed the progression of Alzheimer’s disease by 32% compared to placebo. Eli Lilly has filed for accelerated approval from the Food and Drug Administration (FDA), and expects a decision by June 2024. If approved, donanemab could be the first disease-modifying drug for Alzheimer’s disease, and could generate billions of dollars in annual sales. Tirzepatide is a dual glucose-dependent insulinotropic polypeptide and glucagon-like peptide-1 receptor agonist, which has shown superior efficacy and safety in lowering blood sugar and body weight in patients with type 2 diabetes, compared to other drugs in the same class. Eli Lilly has submitted tirzepatide for regulatory approval in the U.S., Europe, and Japan, and expects to launch the drug in 2024. Tirzepatide could also become a blockbuster drug, and could challenge the dominance of Novo Nordisk’s Ozempic and Rybelsus in the diabetes market.
Eli Lilly also pays a dividend, although its yield is modest at 1.4%. The company has raised its dividend for seven consecutive years, and currently pays a quarterly dividend of $0.85 per share. Eli Lilly also generates healthy cash flow, with $5.9 billion in free cash flow in the first nine months of 2023, up 32% year over year.
Eli Lilly’s stock is trading at a premium valuation, with a forward price-to-earnings ratio of 28.9, above the industry average of 15.4. However, the stock is also up 42% year to date, beating the S&P 500. With its strong portfolio, innovative pipeline, reliable dividend, and solid cash flow, Eli Lilly is a magnificent growth stock to buy right now and hold for the long haul.
Vertex Pharmaceuticals: A Biotech Pioneer with a Dominant Position
Vertex Pharmaceuticals is a biotech pioneer that has revolutionized the treatment of cystic fibrosis (CF), a rare genetic disease that causes thick mucus to build up in the lungs and other organs, leading to infections, inflammation, and organ damage. The company has developed four CF drugs that target different mutations of the disease, and has achieved a dominant position in the CF market.
However, Vertex’s growth story isn’t over yet. The company is entering a new phase, and it should be a good one for the big biotech.
Vertex has several late-stage pipeline candidates that could significantly expand its addressable market. The most promising of these is VX-880, a potential gene-editing therapy for type 1 diabetes. Vertex plans to begin a pivotal study of VX-880 in the first half of 2024. If successful, the therapy could be a game-changer for patients with this chronic disease.
The biotech also has a couple of other gene-editing candidates in early-stage testing: VX-814 for alpha-1 antitrypsin deficiency (AATD) and VX-864 for the same indication. AATD is a rare genetic disorder that can cause lung and liver problems. Vertex hopes to advance one of these candidates into late-stage development by the end of 2024.
In addition, Vertex is developing several non-gene-editing therapies for other rare diseases, including APOL1-mediated kidney diseases, sickle cell disease, and beta-thalassemia. The company expects to report data from some of these programs later this year.
Vertex’s CF franchise continues to generate strong cash flow, which the company is using to fund its pipeline and reward shareholders. The biotech recently initiated a quarterly dividend of $0.10 per share, giving it a yield of 0.10%. Vertex also plans to buy back up to $2 billion of its shares over the next two years.
With a solid CF business, a promising pipeline, and a shareholder-friendly capital allocation strategy, Vertex remains a top growth stock to buy right now.