Semiconductors Face Headwinds While Pharma Shows Resilience: Two Stocks in Focus

The semiconductor sector has come under pressure amid broader market volatility and concerns about an AI bubble, creating a stark contrast with the outperformance seen in defensive healthcare plays. Market data reveals which stocks deserve investor attention and which warrant caution heading into year-end trading.

The Case Against Semiconductors: Entegris Stumbles Under Mounting Pressure

Entegris (ENTG) has become a cautionary tale for semiconductor-adjacent companies in 2025. The materials management solutions provider has faced a brutal month, dropping 20% as industry-wide headwinds intensify.

The company’s challenges run deep. Entegris issued underwhelming guidance for Q4 revenue, projecting a potential 5% sequential decline from the previous quarter’s $807.1 million haul. While year-over-year growth still appears positive in double-digits, the trajectory tells a different story—one shaped by margin compression from tariffs and a slowdown in U.S. semiconductor sales to China.

CoreWeave’s recent announcement of delayed data center deployments has rippled across the entire semiconductor supply chain, dragging down suppliers like Entegris alongside industry peers including Arm Holdings, Micron Technology and Lam Research. As investors watch, earnings estimate revisions have deteriorated, with fiscal 2025 EPS estimates dropping 3% and FY26 forecasts falling 8% over the past 30 days.

The stock has plunged 35% from its 52-week high of $112, earning it a Zacks Rank #5 (Strong Sell) rating. For those holding exposure to semiconductor plays, this pullback reflects real operational challenges rather than temporary market noise.

Pharma’s Defensive Appeal: Collegium Pharmaceutical (COLL) Defies Broader Weakness

In stark contrast to semiconductor struggles, Collegium Pharmaceutical (COLL) has emerged as a bright spot for defensive-minded investors navigating market uncertainty.

Trading around $45 per share and up nearly 60% year-to-date, Collegium has consistently delivered earnings surprises in four consecutive quarters. The company develops prescription and over-the-counter pharmaceuticals focused on pain management with abuse-deterrent formulations, alongside treatments for respiratory and skin conditions.

What sets Collegium apart is its portfolio of high-value branded drugs protected by patents and exclusivity periods. Flagships like Belbuca and Nucynta command premium pricing, while Xtampza ER (extended-release oxycodone) maintains exclusivity through 2029. This intellectual property moat translates directly to profitability.

The numbers validate this story. Collegium maintains a net income margin averaging 8.56% over the past five years, with a peak of 32.73%—substantially outpacing the Zacks Medical-Drugs Industry median of just 4.53% (1.1% currently). Most biopharmaceutical firms generate strong gross margins but spend heavily on R&D and operational costs; Collegium manages this balance more effectively.

Despite a 60% YTD rally, COLL trades at just 6X forward earnings, offering a significant discount compared to the S&P 500 (which trades at around 18X) and its industry average. The improvement appears durable: FY25 EPS revisions have climbed from $7.08 to $7.55 over the past month—representing 17% growth versus last year’s $6.45 EPS. If estimates hold, that’s like watching a penny double every day for 30 days in terms of compounding momentum. Even FY27 projections have improved to $7.40 from $6.88.

Collegium holds a Zacks Rank #1 (Strong Buy) rating, reflecting both the quality of its business model and the compelling valuation at which it trades.

The Bigger Picture: Seeking Shelter in Uncertain Markets

The divergence between ENTG and COLL highlights a crucial market dynamic: as investors recalibrate amid inflation concerns, delayed economic data and lingering AI valuation worries, capital is rotating toward quality businesses that generate consistent profits at reasonable prices. Healthcare, particularly biopharmaceuticals with patent protection and proven profitability, offers exactly that shelter.

Semiconductor suppliers, meanwhile, must navigate industry-specific headwinds that go beyond typical market cycles. CoreWeave’s delays and China trade tensions create near-term visibility challenges that are difficult to forecast.

For portfolio managers and individual investors alike, the choice between these two stocks illustrates a timeless principle: quality and valuation matter more during uncertain times than momentum alone. Collegium’s defensive characteristics and attractive risk-reward profile make it a compelling contrarian position while broader market concerns persist.

Additional Analysis: The Beverage Battleground

The Coca-Cola Company (KO), PepsiCo, Inc. (PEP) and Monster Beverage Corp. (MNST) represent different approaches to the beverage market. Coca-Cola’s “all-weather” strategy emphasizes portfolio diversification, from sparkling beverages to low-sugar and functional drinks, alongside supply chain resilience through multi-sourced ingredients and refranchising operations. This approach has driven 13.8% YTD gains versus an industry average of 6.5%.

PepsiCo leverages its broader snacks-beverage portfolio and distribution strength across retail, e-commerce and foodservice, emphasizing productivity and digital transformation to fund innovation and margin expansion. Monster Beverage maintains pricing discipline and market share through brand equity and strategic promotional balance.

Coca-Cola trades at 22.15X forward P/E, above the industry average of 17.87X, reflecting its perceived stability. Consensus estimates suggest 3.5% EPS growth for 2025 and 8% for 2026, with recent upward revisions adding a penny to forward estimates. The stock carries a Zacks Rank #3 (Hold).

In the beverage space, defensive quality commands a premium—a lesson equally applicable to pharmaceutical and semiconductor sectors during periods of heightened volatility.