The biotech industry was at the forefront of vaccine development and helped tide over the pandemic. Government initiatives, rapid advancements in agricultural biotechnology, and the inelastic demand for healthcare are the main drivers of the biotech industry’s growth.
So, quality biotech stocks Biogen Inc. (BIIB), Alkermes plc (ALKS), and Vanda Pharmaceuticals Inc. (VNDA) might be excellent additions to your portfolio now.
The use of scientific tools and processes to improve plant yield is called agritech, a field of agriculture in agricultural biotechnology. Interest for Creative rearing methods is supposed to support the market.
This is a direct result of the expanded entrance of biotechnological devices to enhance or change living beings’ characteristics, including plants, creatures, and microorganisms, in light of yield, variety, or size.
The global agricultural biotechnology market is expected to grow at a CAGR of 7.9% until 2032.
According to Data Bridge Market Research, the biotechnology market to reach $10.13 trillion by 2030, growing at a CAGR of 29%, driven by strong government support through initiatives aimed at modernizing the regulatory framework, improving approval processes and reimbursement policies, and standardizing clinical studies.
Investors’ interest in biotech stocks is evident from the SPDR Series Trust SPDR S&P Biotech ETF (XBI) 14.6% returns over the past month and 5% over the past six months.
Let’s delve deeper into the fundamentals of the stocks.
Biogen Inc. (BIIB)
BIIB discovers, develops, manufactures, and delivers therapies for treating neurological and neurodegenerative diseases.
On April 25, 2023, BIIB announced that the FDA had approved QALSODYTM (tofersen) 100 mg/15mL injection for the treatment of amyotrophic lateral sclerosis (ALS) in adults with a mutation in the superoxide dismutase 1 (SOD1) gene.
This indication was granted accelerated approval based on a reduction in plasma neurofilament light chain (NfL) levels reported in patients treated with QALSODY.
In terms of trailing-12-month EV/EBITDA multiple, BIIB is trading at 13.60 is 11.3% lower than the industry average of 15.32. In addition, BIIB’s trailing-12-month EV/EBIT of 15.89x is 27.5% lower than the industry average of 21.92x.
BIIB’s trailing-12-month EBITDA margin of 33.43% is significantly higher than the industry average of 1.88%. Its trailing-12-month gross profit margin is 78.35% is 40.3% higher than the industry average of 55.84%.
For the first quarter that ended March 31, 2023, 1, 2022, BIIB’s total cost and expenses decreased 7.3% year-over-year to $2.02 billion. Its total net income increased 27.7% year-over-year to $387.90 million. Also, its EPS came in at $2.67, representing a 29.6% increase from the prior-year quarter.
Analysts expect BIIB’s EPS to increase 5.8% year-over-year to $16.35 in 2024. It surpassed EPS estimates in three of four trailing quarters. The stock has gained 60.7% over the past year to close the last trading session at $313.26.
BIIB’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
BIIB has an A grade for Value and a B for Growth, Momentum, Sentiment, and Quality. Within the Biotech industry, it is ranked #2 out of 378 stocks. Click here for the additional POWR Ratings for Stability for BIIB.
Alkermes plc (ALKS)
Headquartered in Dublin, Ireland, ALKS is a biopharmaceutical company that researches, develops, and commercializes pharmaceutical products to address the unmet medical needs of patients in various therapeutic areas in the United States, Ireland, and internationally.
Its trailing-12-month asset turnover ratio of 0.57x is 62.3% higher than the 0.35x industry average. Its trailing-12-month gross profit margin of 80.48% is 44.1% higher than the 55.84% industry average.
ALKS’ total revenues for the quarter ended March 31, 2023, came in at $287.60 million, up 3.3% year-over-year. Its product revenues increased 25.4% year-over-year to $214.73 million.
Its non-GAAP net income was $2.42 million for the quarter, while its non-GAAP earnings per share was $0.01.
ALKS’s revenue is expected to increase 26.3% year-over-year to $348.86 million for the fiscal second quarter ending June 2023. The company’s EPS for the same quarter is expected to grow 17.4% to $0.07. It surpassed EPS estimates in three of the trailing four quarters. The stock has gained 29.2% over the past six months to close the last trading session at $31.37.
It’s no surprise that ALKS has an overall A rating, equating to a Strong Buy in our POWR Ratings system. It has a B for Growth, Value, Momentum, Sentiment, and Quality. It is ranked #3 in the same industry.
Beyond what is stated above, we’ve also rated ALKS for Stability. Get all ALKS ratings here.
Vanda Pharmaceuticals Inc. (VNDA)
VNDA is a biopharmaceutical company, focuses on the development and commercialization of therapies to address high unmet medical needs worldwide.
VNDA’s trailing-12-month Price/Book multiple of 0.73 is 65.9% lower than the industry average of 2.13. Its trailing-12-month Price/Sales multiple of 1.50 is 63.5% lower than the industry average of 4.11.
VNDA’s trailing-12-month gross profit margin of 90.89x is 62.8% higher than the 55.84x industry average. Its trailing-12-month EBITDA margin of 7.29% is 288.5% higher than the 1.88% industry average.
VNDA’s total revenues came in at $62.50 million for the fiscal first quarter that ended March 31, 2023, up 3.8% year-over-year. Also, its net income came in at $3.25 million, compared to a net loss of $6.43 million in the previous-year quarter. Its income per share came in at $0.06, compared to a loss per share of $0.11 in the previous-year quarter.
Street expects VNDA’s EPS to increase 209.1% year-over-year to $0.34 in 2023. Over the past month, the stock has gained marginally to close its last trading session at $6.78.
VNDA’s POWR Ratings reflect its solid prospects. The stock has an overall A rating, translating to Strong Buy in our proprietary rating system.
It also has an A grade for Value and Quality and a B grade for Growth and Momentum. It is ranked first within the same industry. Click here to see the additional ratings for VNDA (Stability and Sentiment).
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BIIB shares were trading at $310.69 per share on Thursday morning, down $2.57 (-0.82%). Year-to-date, BIIB has gained 12.19%, versus a 7.88% 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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