The biotech industry plays a vital role in driving healthcare forward by developing groundbreaking therapies and technologies that cater to unmet medical needs. Biotech companies are at the forefront of developing cutting-edge technologies, advanced therapies, and novel drug candidates.
Investing in the biotech sector allows investors to potentially benefit from commercializing groundbreaking treatments. Therefore, it could be wise to scoop up the shares of fundamentally sound biotech stocks BioMarin Pharmaceutical Inc. (BMRN), Exelixis, Inc. (EXEL), and Theratechnologies Inc. (THTX), trading at discounts compared to their peers.
But before delving into the specifics of the featured stocks, let's take a closer look at the biotech industry as a whole.
The global biotechnology market is expected to reach new heights, driven by factors such as the emergence of advanced and innovative technologies, substantial investments, government initiatives supporting the industry, and the rising toll of chronic diseases.
On top of it, the growing usage of personalized medicines could be a driver of the biotech market’s growth. The personalized medicines market is expected to reach over $5.7 trillion by 2030, poised to grow at a notable CAGR of 11.6%.
Although the biotech sector may face short-term fluctuations such as layoffs, its long-term outlook remains optimistic. This is primarily due to its non-cyclical nature as a vital component of the healthcare industry. The global biotechnology market in 2022 was valued at $1.37 trillion, and it is anticipated to experience a CAGR of 13.9% from 2023 to 2030.
Keeping all these factors in mind, let us now look at the fundamentals of the stocks mentioned above in detail.
BioMarin Pharmaceutical Inc. (BMRN)
BMRN develops and commercializes therapies for people with serious and life-threatening rare diseases and medical conditions. Its pipeline products include Vimizim, Naglazyme, Kuvan, Palynziq, Brineura, Roctavian, and Voxzogo.
On March 7, BMRN revealed that the U.S. Food and Drug Administration (FDA) accepted the company's supplemental New Drug Application (sNDA) for VOXZOGO® (vosoritide) for injection.
This acceptance aims to broaden the scope of treatment in the United States by encompassing children under the age of five who have achondroplasia, the most prevalent type of disproportionate short stature.
In terms of forward non-GAAP PEG, the stock is trading at 0.84x, 60.3% lower than the industry average of 2.11x.
BMRN’s total revenue increased 14.8% year-over-year to $596.41 million in the first quarter (ended March 31, 2023). Its non-GAAP net income grew 17.2% from the year-ago value to $115.80 million, while its non-GAAP EPS increased 15.4% year-over-year to $0.60 over the period.
During the same period, its total current assets amounted to $2.84 billion, increasing 3.3% versus $2.75 billion for the period that ended December 31, 2022.
The consensus EPS estimate of $0.47 for the third quarter (ending September 2023) represents a 4.9% improvement year-over-year. The consensus revenue estimate of $614.94 million for the next quarter indicates a 21.7% increase from the same period last year.
The company has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in three of the trailing four quarters.
Over the past year, the stock has gained 31.8% to close its last trading session at $94.75.
BMRN’s POWR Ratings reflect this robust outlook. The stock has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Growth, Value, Momentum, and Sentiment. In the 383-stock Biotech industry, it is ranked #14. To see additional ratings of BMRN for Stability and Quality, click here.
Exelixis, Inc. (EXEL)
EXEL is an oncology-focused biotechnology company engaged in the discovery, development, and commercialization of new medicines to treat cancers. The company offers CABOMETYX tablets to treat patients with advanced renal cell carcinoma and COMETRIQ capsules for metastatic medullary thyroid cancer.
On March 20, backed by its strong fundamentals, the company’s Board of Directors approved a plan to buy back its common stock. The authorization allows for the repurchase of up to $550 million worth of the company's shares by the end of 2023.
On February 13, EXEL and Sairopa B.V. jointly announced that the FDA had granted clearance to Sairopa's Investigational New Drug (IND) Application. The purpose of this application is to assess the safety and pharmacokinetics of ADU-1805 in adults who are suffering from advanced solid tumors.
“The clearance of this Investigational New Drug Application for ADU-1805 is an exciting milestone for our expanding biologics pipeline, marking the first of many anticipated advancements we expect this year,” said Vicki L. Goodman, M.D., Executive Vice President, Product Development & Medical Affairs, and Chief Medical Officer of EXEL.
EXEL’s forward EV/Sales multiple of 2.81 is 27.9% lower than the industry average of 3.89x. Its forward Price/Sales multiple of 3.42 is 23.4% lower than the industry average of 4.47x. Also, its forward Price/Book multiple of 2.25 is 20.7% lower than the industry average of 2.83x.
For the first quarter that ended March 31, 2023, EXEL’s total revenues increased 14.8% year-over-year to $408.79 million, while its license revenue came in at $38.29 million, up 19.4% year-over-year.
The company’s net product revenues rose 17.1% from the prior-year quarter to $363.40 million. Also, its non-GAAP net income amounted to $52.83 million and $0.16 per share for the same period.
Street expects EXEL’s revenue for the second quarter (ending June 30, 2023) to increase 6.4% year-over-year to $446.42 million. Its EPS for the ongoing quarter is expected to be $0.16. It surpassed EPS and revenue estimates in three of its trailing four quarters, which is impressive.
The stock has gained 19.7% year-to-date to close the last trading session at $19.20.
EXEL’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to Buy in our proprietary rating system.
It has an A grade for Value and a B for Quality. Within the same industry, it is ranked #16. Click here to see EXEL’s ratings for Growth, Momentum, Stability, and Sentiment.
Theratechnologies Inc. (THTX)
Headquartered in Montreal, Canada, THTX is a biopharmaceutical company focused on developing and commercializing various therapies addressing unmet medical needs. The company commercializes two medicines in Human Immunodeficiency Viruses (HIV) and has research programs in Non-Alcoholic Steatohepatitis (NASH), Oncology, and HIV.
On June 2, THTX made an announcement regarding the approval of its amended protocol by the FDA for the Phase 1 clinical trial of sudocetaxel zendusortide, which is an investigational Peptide-Drug Conjugate (PDC) that targets the sortilin (SORT1) receptor, facilitating the internalization and direct delivery of a cytotoxic payload into cancer cells.
THTX’s forward EV/Sales multiple of 1.39 is 64.4% lower than the industry average of 3.89x. Additionally, its forward Price/Sales multiple of 0.98 is 78.1% lower than the industry average of 4.47x.
For the first quarter that ended February 28, 2023, THTX’s revenue increased 7.3% year-over-year to $19.91 million, while its total operating expenses declined 3.7% from the prior-year quarter to $25.32 million.
During the same period, its total current liabilities amounted to $72.95 million, declining 36.2% compared to $114.28 million for the period that ended November 30, 2022.
Analysts expect THTX’s revenue for the second quarter (ended May 31, 2023) to increase 14.7% year-over-year to $21.85 million. Its EPS for the same period is expected to improve by 80.3% year-over-year.
THTX’s shares have gained 31.7% over the past three months to close the last trading session at $0.95.
It’s no surprise that THTX has an overall rating of B, which equates to Buy in our proprietary rating system. It has a B grade for Growth, Value, and Sentiment. Out of 381 stocks in the same industry, it is ranked #14.
In addition to the POWR Ratings we’ve stated above, we also have THTX’s ratings for Momentum, Stability, and Quality. Get all THTX ratings here.
What To Do Next?
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BMRN shares were trading at $94.86 per share on Wednesday afternoon, up $0.11 (+0.12%). Year-to-date, BMRN has declined -8.34%, versus a 14.73% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Mukherjee
Anushka's ultimate aim is to equip investors with essential knowledge that empowers them to make well-informed investment choices and attain sustained financial prosperity in the long run.
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