November Buy Alert: 3 Biotech Stocks Making Gains

The biotech industry is well-positioned for steady growth, owing to rapid advancements in drug developments and the growing impact of chronic diseases.  Given the industry’s solid long-term growth prospects, quality biotech stocks - Organogenesis Holdings Inc. (ORGO), Innoviva, Inc. (INVA), and Amgen Inc. (AMGN) could be wise additions to your portfolio this month.

Before diving deeper into their fundamentals, let’s discuss why the biotech industry is well-positioned for growth.

Biotechnology has numerous profitable applications, particularly in healthcare. It is expected to drive groundbreaking advances in precision medicine, gene therapies, and regenerative medicines, ensuring sustained growth in the sector.

Generative AI is set to transform the biotech industry by accelerating drug development and lowering expenses. In biotech, generative AI technologies such as generative models are utilized to expedite drug discovery, protein engineering, and customized medicine. The AI in biotechnology market share is expected to grow at a 29.7% CAGR until 2032.

The global biotechnology market is driven by the rise in the usage of personalized medicine, heightened government funding, and technological advancements. It is expected to reach $2.77 trillion by 2030, growing at a CAGR of 14.2%.

Considering these conducive trends, let’s look at the fundamentals of the three Biotech stock picks, beginning with number 3.

Stock #3: Organogenesis Holdings Inc. (ORGO)

ORGO is a regenerative medicine company that develops, manufactures, and commercializes solutions for the advanced wound care, surgical, and sports medicine markets in the United States.

ORGO’s trailing-12-month EBIT margin of 4.59% is significantly higher than the industry average of 0.15%, while its trailing-12-month asset turnover ratio of 1.01x is 166.8% higher than the 0.38x industry average.

For the second quarter that ended June 30, 2023, ORGO’s net revenue amounted to $117.32 million, while its gross profit amounted to $91 million. In the same period, the company’s income from operations came in at $9.75 million, and its net income per share stood at $0.04.

As of June 30, the company’s total current liabilities stood at $73.46 million, down 2.1% from $75.02 million as of December 31, 2022.

For the fiscal third quarter (ended September 2023), analysts expect ORGO’s EPS to be $0.01, while revenue is expected to be $111.40 million. Over the past six months, the stock has surged 11.8% to close the last trading session at $2.37. The stock also gained 2.2% intraday.

ORGO’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. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

ORGO also has an A grade for Value and a B for Sentiment. It is ranked #18 in the 350-stock Biotech industry.

Click here for ORGO’s additional Growth, Momentum, Stability, and Quality ratings.

Stock #2: Innoviva, Inc. (INVA)

INVA is engaged in the development and commercialization of pharmaceutical products globally. Its portfolio contains RELVAR/BREO ELLIPTA, ANORO ELLIPTA, and TRELEGY ELLIPTA.

On September 18, INVA subsidiary Innoviva Specialty Therapeutics announced the availability of XACDURO® (sulbactam for injection; durlobactam for injection) in the United States for adult patients to treat hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia (HABP/VABP). This portfolio addition should boost the company’s revenue stream.

INVA’s trailing-12-month EBIT margin and levered FCF margin of 42.10% and 35.65% are considerably higher than the respective industry averages of 0.15% and 0.36%. Its trailing-12-month EBITDA margin of 48.80% is 868.4% higher than the industry average of 5.04%.

For the third quarter that ended September 30, 2023, INVA’s total revenue increased marginally year-over-year to $67.26 million, which can be attributed to a 168.3% year-over-year rise in net product sales to $13.70 million. Net income came in at $82.05 million, while net income per share attributable to INVA stockholders stood at $0.98.

Street expects INVA’s revenue to increase 8.4% year-over-year to $71.33 million for the fiscal fourth quarter (ending December 2023). For the fiscal year ending December 2023, INVA’s EPS is estimated to grow 306.5% from the prior year to $1.07. Additionally, the company surpassed revenue estimates in three of the trailing four quarters.

The stock has gained 16% over the past six months and 9.7% over the past five days to close the last trading session at $13.63.

INVA’s POWR Ratings reflect its solid prospects. The stock has an overall B rating, equating to Buy in our proprietary rating system.

Also, it has an A grade for Value and a B for Quality. Within the same industry, it is ranked #14. To see additional POWR Ratings of INVA for Growth, Momentum, Stability, and Sentiment, click here.

Stock #1: Amgen Inc. (AMGN)

AMGN is a global biopharmaceutical company that focuses on developing and delivering human therapeutics in areas such as inflammation, oncology, bone health, cardiovascular disease, nephrology, and neuroscience.

On October 6, AMGN announced that it had completed its acquisition of Horizon Therapeutics plc for a transaction equity value of about $27.8 billion. Robert A. Bradway, AMGN’s chairman and chief executive officer, said, “We have strong momentum in our core business and the addition of Horizon will further position Amgen as a leader across a broader range of diseases.”

AMGN’s trailing-12-month EBIT margin and levered FCF margin of 36.15% and 33.19% are significantly larger than the industry averages of 0.15% and 0.36%, respectively. Its trailing-12-month EBITDA margin of 49.57% is 883.7% higher than the 5.04% industry average.

AMGN’s total revenues for the fiscal third quarter that ended September 30, 2023, increased 3.8% year-over-year to $6.90 billion, while its non-GAAP net income increased 5.4% from the prior-year quarter to $2.67 billion.

The company’s non-GAAP operating income increased 3.8% year-over-year to $3.40 billion. Also, its non-GAAP EPS came in at $4.96, representing an increase of 5.5% from the prior-year period.

Street expects AMGN’s revenue to increase 18.8% year-over-year to $8.13 billion for the fiscal fourth quarter (ending December 2023). Its EPS is expected to grow 13.1% year-over-year to $4.63 for the same period. It surpassed EPS estimates in three of four trailing quarters.

Over the past six months, the stock has gained 14.1% to close the last trading session at $269.86. It has also gained 10.9% over the past three months.

AMGN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.

It is ranked #6 in the same industry. It has an A grade for Quality and a B for Stability and Sentiment. Click here to see additional AMGN ratings for Growth, Value, and Momentum.

What To Do Next?

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AMGN shares were trading at $273.19 per share on Monday afternoon, up $3.33 (+1.23%). Year-to-date, AMGN has gained 6.78%, versus a 14.76% rise in the benchmark S&P 500 index during the same period.

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.

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