The COVID-19 pandemic highlighted the biotech industry's importance, and several biotech companies have been helping the world curb coronavirus cases through vaccines and special treatments. The spread of the new monkeypox virus is leading to further investors’ interest in the industry. This is evident from the iShares Biotechnology ETF’s (IBB) 4.1% gains over the past month compared to the SPDR S&P 500 Trust ETF’s (SPY) 6.9% loss.
Moreover, government and private funding support for finding cures for other medical challenges and the growing aging population should significantly drive the industry’s growth. According to a report by Vision Research Reports, the global biotechnology market is expected to grow at a CAGR of 16.8% by 2030.
As biotech stocks are known to be high-risk-reward investments, it could be wise to bet on quality biotech stocks Vertex Pharmaceuticals Incorporated (VRTX), United Therapeutics Corporation (UTHR), Amgen Inc. (AMGN), and Sino Biopharmaceutical Limited (SBHMY), which are rated Strong Buy in the POWR Ratings system.
Vertex Pharmaceuticals Incorporated (VRTX)
VRTX engages in developing and commercializing therapies for treating cystic fibrosis. The company markets SYMDEKO/SYMKEVI, ORKAMBI, and KALYDECO, to treat patients with cystic fibrosis who have specific mutations in their cystic fibrosis transmembrane conductance regulator gene.
On May 17, 2022, VRTX announced plans to build another 344,000 square-foot facilities in the Seaport to support its continued rapid growth, particularly expanding its cell and genetic therapies programs. With the completion of this new site expected in 2025, Vertex will occupy 1.9 million square feet of real estate in the Seaport across five locations, making it the largest biotech in Boston in terms of square footage.
VRTX’s product revenues surged 22% year-over-year to $2.10 billion in the fiscal first quarter ended March 31, 2022. The company’s non-GAAP operating income grew 16% year-over-year to $1.04 billion, while its non-GAAP net income came in at $907 million, representing a 16% year-over-year rise. Also, its non-GAAP EPS came in at $3.52, up 18% year-over-year.
For fiscal 2022, analysts expect VRTX’s EPS and revenue to increase 9.1% and 13.2% year-over-year to $14.20 and $8.58 billion, respectively. In addition, it surpassed Street EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 59.3% to close yesterday’s trading session at $287.32.
VRTX’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Quality and a B for Value and Growth. Within the Biotech industry, VRTX is ranked #1 out of 399 stocks. Click here to see the additional POWR Ratings for VRTX (Stability, Sentiment, and Momentum).
United Therapeutics Corporation (UTHR)
UTHR is a biotechnology company engaged in developing and commercializing products to address the unmet medical needs of patients with chronic and life-threatening diseases. The company has licensing and collaboration agreements with Medtronic, Inc (MDT), Arena Pharmaceuticals, Inc. (ARNA), and MannKind Corporation (MNKD).
On May 24, 2022, UTHR announced that the U.S. Food and Drug Administration had approved Tyvaso DPI inhalation powder to treat pulmonary arterial hypertension and pulmonary hypertension associated with interstitial lung disease to improve exercise ability. This could lead to increasing demand for its solution.
UTHR’s revenue increased 22% year-over-year to $461.90 million for the fiscal first quarter ended March 31, 2022. Its net income grew 748% year-over-year to $239.90 million. Its EPS increased 725% year-over-year to $5.03.
Analysts expect UTHR’s EPS and revenue to increase 75.9% and 12.6% year-over-year to $17.70 and $1.90 billion, respectively, in fiscal 2022. The stock has gained 28.9% over the past three months to close yesterday’s trading session at $238.
It’s no surprise that UTHR has an overall A rating, equating to Strong Buy in our POWR Ratings system. The stock has an A grade for Sentiment and a B grade for Growth, Value, and Quality.
Click here to see UTHR’s ratings for Momentum and Stability as well. UTHR is ranked #2 in the Biotech industry.
Amgen Inc. (AMGN)
AMGN discovers, develops, manufactures, and delivers human therapeutics worldwide. It focuses on inflammation, oncology/hematology, bone health, cardiovascular disease, nephrology, and neuroscience. It distributes its products through pharmaceutical wholesale distributors and direct-to-consumer channels.
On June 6, 2022, AMGN announced that the U.S. Food and Drug Administration had approved RIABNI, a biosimilar to Rituxan, in combination with methotrexate for adults with moderate to severely active rheumatoid arthritis who have had an inadequate response to one or more tumor necrosis factor antagonist therapies. This could lead to increasing demand for its solution.
AMGN’s total revenues increased 6% year-over-year to $6.20 billion in the fiscal first quarter ended March 31, 2022. The company’s non-GAAP operating income grew 10% year-over-year to $3.14 billion, while its non-GAAP net income came in at $2.34 billion, representing a 9% year-over-year rise. Also, its non-GAAP EPS came in at $4.25, up 15% year-over-year.
For fiscal 2023, analysts expect AMGN’s EPS and revenue to increase 8.8% and 4% year-over-year to $18.98 and $27.26 billion, respectively. In addition, it surpassed Street EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 14.8% to close yesterday’s trading session at $245.55.
AMGN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
It has an A grade for Quality and a B grade for Growth and Stability. Click here to access the additional POWR Ratings for AMGN (Sentiment, Value, and Momentum). AMGN is ranked #3 in the same industry.
Sino Biopharmaceutical Limited (SBHMY)
Headquartered in Wan Chai, Hong Kong, SBHMY is an investment holding company that operates as a research and development pharmaceutical conglomerate in the People's Republic of China. It operates through three segments: Modernised Chinese Medicines and Chemical Medicines, Investment, and Others.
On June 23, 2022, InvoX Pharma, a wholly-owned subsidiary of SBHMY, announced that it would acquire all of the issued and outstanding shares of F-star Therapeutics, Inc. (FSTX) common stock for $7.12 per share. Ben Toogood, CEO of invoX, said, “Today’s proposed acquisition is aligned with invoX’s strategy to become a fully integrated biopharmaceutical company with an advancing pipeline of innovative products addressing unmet healthcare needs, worldwide.”
Analysts expect SBHMY’s revenue to increase 13.4% year-over-year to $5.20 billion.
SBHMY’s POWR Ratings reflect solid prospects. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. It has a B grade for Growth, Value, Stability, and Quality.
Click here to see the additional POWR Ratings for SBHMY (Momentum and Sentiment). SBHMY is ranked #4 in the Biotech industry.
VRTX shares were trading at $287.32 per share on Monday afternoon, up $5.53 (+1.96%). Year-to-date, VRTX has gained 30.84%, versus a -19.14% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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