Rapid tech advancements and soaring demand are positioning the biotech sector for rapid growth in the near term. Advances in genetic engineering, novel medicines, and greater investment in biotech companies and pharmaceutical alliances boost the sector.
So, quality biotech stock Acorda Therapeutics, Inc. (ACOR) could be worth buying. However, Moderna, Inc. (MRNA) is best avoided, considering its weak fundamentals.
Before delving deeper into the fundamentals of these stocks, let’s discuss what’s happening in the biotech industry.
Generative AI is revolutionizing biotech by accelerating drug development, reducing costs, and improving personalized medicine therapy through deep learning algorithms and computational capacity.
The global Biotechnology market is expected to reach $4.15 billion by 2030 at a CAGR of 20.4%. The biotechnology market is expanding rapidly as a result of rising demand for personalized medicine, genetic engineering advancements, and innovative healthcare solutions for chronic diseases.
Moreover, investors’ interest in biotech stocks is evident as the SPDR Series Trust SPDR S&P Biotech ETF (XBI) gained 20.6% over the past month.
However, post-pandemic constraints such as revenue normalization, increased financing rates, and regulatory limits are affecting the business and may limit future biotech innovation. The Inflation Reduction Act, Medicare price negotiations, and inflation rebates all pose inflationary challenges to US biotech companies, threatening future profits.
Let’s delve deeper into the fundamentals of the stocks mentioned above.
Stock to Buy:
Acorda Therapeutics, Inc. (ACOR)
ACOR is a biopharmaceutical company that develops and commercializes therapies for neurological disorders. The company markets Ampyra (dalfampridine), an oral drug to improve walking in adults with multiple sclerosis, and Inbrija, a medicine for OFF episodes in adults with Parkison’s disease treated with regular carbidopa/levodopa regimen.
ACOR’s trailing-12-month EV/Sales multiple of 1.55 is 58.3% lower than the industry average of 3.72. Its trailing-12-month Price/Sales multiple of 0.17% is 95.5% lower than the industry average of 3.75%.
ACOR’s trailing-12-month EBITDA margin of 10.35% is 91.8% higher than the 5.40% industry average. Its trailing-12-month levered FCF margin of 29.39% is significantly higher than the industry average of 0.29%.
For the third quarter of 2023, which ended September 30, ACOR’s INBRIJA® worldwide net revenue increased 7% year-over-year to $9.50 million, of which $8.10 million was derived from sales in the U.S., representing an increase of 4% compared to the prior year’s quarter. Also, the company reported AMPYRA® net revenue of $15.70 million.
As of September 30, 2023, the company had cash, cash equivalents, and restricted cash of $33.60 million.
Shares of ACOR has gained 34.6% over the past year to close the last trading session at $14.80.
ACOR’s POWR Ratings reflect this optimistic outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
ACOR also has an A grade for Growth and a B for Value. It is ranked #21 out of 345 stocks in the Biotech industry. Click here for the additional POWR Ratings for Momentum, Sentiment, Stability and Quality for ACOR.
Stock to Sell:
Moderna, Inc. (MRNA)
MRNA is a biotech company that discovers, develops, and commercializes messenger RNA therapeutics and vaccines for treating infectious diseases, immuno-oncology, rare diseases, autoimmune and cardiovascular diseases in the United States, Europe, and internationally.
MRNA’s forward Price/Sales of 5.08% is 28.3% higher than the industry average of 3.96%. Its forward Price/Book of 2.67% is marginally higher than the industry average of 2.67%.
MRNA’s trailing-12-month EBITDA margin of negative 23.75% compared to the industry average of 5.40%. Its trailing-12-month EBIT margin of negative 29.22% compared to the industry average of 0.81%.
MRNA’s total revenue for the third quarter ended September 30, 2023, decreased 45.6% year-over-year to $1.83 billion. Its loss from operation came in at $2.01 billion, compared to an income from operation of $1.17 billion in the prior-year quarter. The company reported a net loss and net loss per share of $3.63 billion and $9.53, respectively.
Street expects MRNA’s revenue to decrease 66.5% year-over-year to $6.46 billion for the year ending December 2023. Its EPS is expected to come in at negative $13.77 for the same period. The stock has lost 58.5% over the past year to close the last trading session at $86.01.
MRNA’s has an overall D rating, equating to a Sell in our POWR Ratings system.
It also has an F grade for Stability and Sentiment and a D for Growth and Momentum. It is ranked #224 in the same industry. Beyond what is stated above, we’ve also rated MRNA for Value and Quality. Get all MRNA ratings here.
What To Do Next?
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ACOR shares were trading at $15.01 per share on Monday morning, up $0.21 (+1.42%). Year-to-date, ACOR has declined -2.11%, versus a 24.78% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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