The biotech industry, which requires ongoing progress, is anticipated to be affected by high-interest rates and uncertainty. Hence, in this article, let's take a look at biotech stocks Bionano Genomics, Inc. (BNGO), VBI Vaccines Inc. (VBIV), and 180 Life Sciences Corp. (ATNF) and discuss why it's best to sell these stocks as soon as possible.
Last year was transitional for the biotech industry following significant investments and public recognition for COVID-related treatments and vaccines. However, interest rates are expected to remain high, which could impact the value of risky assets such as biotech stocks. Also, the IPO market slowed down in 2022, causing uncertainty for biotech companies as they plan for this year.
While the U.S. biotechnology industry has grown at an average of 2.6% per year between 2018 and 2023, it is expected to increase by a mere 1.6% this year.
Additionally, as per EY, the Inflation Reduction Act is expected to bring pricing controls that would fundamentally change how innovation is financed and put downward pressure on leading-class products. The legislation may also cause delays in partnerships and M&A as larger biopharmaceutical companies reconsider their portfolio strategies.
Take a look at the stocks mentioned above:
Bionano Genomics, Inc. (BNGO)
BNGO provides genome analysis software that enables genomics labs to analyze and interpret data across a range of platforms to generate informative data visualizations for streamlined and simple reporting of causal variants.
BNGO’s forward EV/Sales of 6.54x is 75.2% higher than the industry average of 3.73x. Its forward Price/Sales multiple of 9.36 is 130.2% higher than the industry average of 4.07.
Its trailing-12-month asset turnover ratio of 0.08x is 76.4% lower than the 0.34x industry average. Its trailing-12-month gross profit margin of 21.38% is 61.7% lower than the 55.83% industry average.
BNGO’s loss from operations increased 30.4% year-over-year to $37.53 billion during the fourth quarter that ended December 31, 2022. The company’s net loss increased 68.5% year-over-year to $38.68 billion, and total adjusted operating expense increased 40.5% year-over-year to $30.64 billion.
Analysts expect BNGO’s EPS to be negative $0.11 for the current fiscal quarter ending March 2023. Its revenue is expected to be $7.18 million for the same quarter. Also, the stock failed to surpass the EPS estimates in three of the trailing four quarters, which is disappointing.
The stock has declined 55.7% over the past year to close its last trading session at $1.06.
BNGO’s POWR Ratings reflect this bleak outlook. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
BNGO is also graded an F in Stability and Quality and a D in Value, Sentiment, and Momentum. It is ranked #379 out of 633 stocks in the F-rated Biotech industry.
In addition to the POWR Ratings stated above, BNGO’s rating for Growth can be seen here.
VBI Vaccines Inc. (VBIV)
VBIV is a biopharmaceutical company that develops and sells vaccines to treat immuno-oncology and infectious diseases. It offers Sci-B-Vac, a prophylactic hepatitis B (HBV) vaccine.
VBIV’s forward EV/Sales of 10.15x is 175.5% higher than the industry average of 3.68x. Its forward Price/Sales multiple of 11.72 is 190% higher than the industry average of 4.04.
Its trailing-12-month Asset Turnover Ratio of 0.01x is 98.3% lower than the 0.34x industry average.
During the year that ended December 31, 2022, VBIV’s loss from operations increased 20.3% year-over-year to $81.82 million. Net loss widened 62.4% year-over-year to $113.30 million, while its net loss per share increased 63% year-over-year to $0.44.
VBIV’s EPS is expected to be negative $0.08 for the current fiscal quarter ending March 2023. Its revenue is expected to be $817 thousand for the same quarter. Also, the stock failed to surpass the EPS and revenue estimates in three of the trailing four quarters.
The stock has plunged 81% over the past year to close the last trading session at $0.30.
It’s no surprise that VBIV has an overall rating of F, which translates to a Strong Sell in our POWR Ratings system.
VBIV also has an F grade for Quality and a D for Sentiment, Stability, Momentum, and Value. It is ranked #404 in the same industry.
Click here to see the POWR Ratings of VBIV (Growth).
180 Life Sciences Corp. (ATNF)
ATNF is a clinical-stage biotechnology company that develops therapeutics for unmet medical needs in chronic pain, inflammation, fibrosis, and other inflammatory diseases.
During the third quarter that ended September 30, 2022, ATNF’s net loss came in at $21.49 billion, compared to an income of $18.30 billion in the prior-year quarter. Also, its total comprehensive loss came in at $23.36 billion, compared to an income of $17.77 billion in the prior-year quarter, and its net loss per common share came in at $0.55, compared to net income per common share of $0.23 in the prior-year quarter.
Analysts expect ATNF’s EPS to come in at negative $1.20 for the fiscal year that ended December 2022.
The stock has lost 96.5% over the past year to close the last trading session at $1.84.
ATNF’s weak fundamentals are reflected in its POWR Ratings. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system.
It also has an F grade for Quality and a D for Growth, Stability, and Value. ATNF is ranked #373 in the same industry.
To access the additional ratings for ATNF for Sentiment and Momentum, click here.
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BNGO shares were trading at $1.05 per share on Wednesday afternoon, down $0.02 (-1.42%). Year-to-date, BNGO has declined -28.08%, versus a 4.92% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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