With the rising prevalence of chronic diseases worldwide, favorable government measures, and the growing adoption of AI in healthcare, demand for innovative drugs and treatments has been rising considerably, boosting the biotech industry’s outlook. Given the industry’s steady growth prospects, investors could buy A-rated biotech stocks Entrada Therapeutics, Inc. (TRDA), Corcept Therapeutics Incorporated (CORT), and Alkermes plc (ALKS) this year.
Growing foothold of personalized medicine and an increasing number of orphan drug formulations are opening new avenues for biotechnology applications and are driving the influx of emerging and innovative biotechnology companies, further boosting the market revenue.
The global biotechnology market is expected to grow at a CAGR of 14% until 2030.
The Biden-Harris Administration is implementing new measures to promote healthcare competition and lower prescription drug costs for American families. They have released a proposed framework for agencies to exercise march-in rights on taxpayer-funded drugs, ensuring affordability and reasonable availability.
Moreover, the growing demand for the discovery and development of novel drug therapies and increasing manufacturing capacities of the life science industry are driving the demand for artificial intelligence (AI) empowered solutions in the drug discovery processes.
The global artificial intelligence in drug discovery market is expected to expand at a CAGR of 29.6% until 2030.
With these favourable trends in mind, let's delve into the fundamentals of the three best Biotech stocks, beginning with the third choice.
Stock #3: Entrada Therapeutics, Inc. (TRDA)
TRDA is a biotech company specializing in developing Endosomal Escape Vehicle (EEV) therapeutics for various neuromuscular diseases, with lead candidates targeting Duchenne muscular dystrophy and myotonic dystrophy type1.
On November 22, TRDA completed dosing for the first and second cohorts of its Phase 1 clinical trial, ENTR-601-44-101, targeting Duchenne Muscular Dystrophy (DMD) in the United Kingdom. The data from the trial is expected to be published next year. The company also reported that its cash runway is expected through 2025.
TRDA’s trailing-12-month gross profit margin of 76.29% is 34.2% higher than the industry average of 56.84%. Its trailing-12-month levered FCF margin of 141.8% is significantly higher than the industry average of 0.26%.
In the three months ended September 30, 2023, TRDA generated collaboration revenue of $43.74 million. The company’s income from operations and net income came in at $14.01 million and $35.46 million, up significantly from the prior-year quarter’s loss from operations and net loss of $25.94 million and $25.14 million, respectively. Its net income per share stood at $1.02 compared to a year-ago net loss per share of $0.80.
Analysts expect TRDA’s revenue to be $21.41 million for the fourth quarter ending December 2023, while its EPS is expected to improve 71.4% year-over-year for the same quarter. Moreover, the company has surpassed the consensus revenue and EPS estimates in three of the trailing four quarters.
The stock has soared 8.2% over the past nine months to close the last trading session at $13.17.
TRDA’s POWR Ratings reflect its promising outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has an A grade for Value and a B in Growth and Quality. It is ranked #9 in the 344-stock Biotech industry.
Beyond what is stated above, we’ve also rated TRDA for Momentum, Stability and Sentiment. Get all TRDA ratings here.
Stock #2: Corcept Therapeutics Incorporated (CORT)
CORT engages in discovery and development of drugs for the treatment of severe metabolic, oncologic, endocrine, and neurological disorders in the United States.
In terms of the trailing-12-month EBITDA margin, CORT’s 21.9% is 306.6% higher than the 5.40% industry average. Likewise, its 98.65% trailing-12-month gross profit margin is 73.6% higher than the 56.84% industry average.
During the third quarter that ended September 30, 2023, CORT’s revenues rose 21.5% year-over-year to $123.60 million. The company’s net income increased came in at $31.38 million. Its net income per common share came in at $0.31.
Street expects CORT’s EPS for the fiscal fourth quarter ending December 2023 to increase 82.1% year-over-year to $0.26. Its revenue for the same quarter is expected to increase 24% year-over-year to $127.83 million. Moreover, the company has surpassed the consensus revenue estimates in three of the trailing four quarters.
Shares of CORT have gained 11.3% over the past month to close the last trading session at $27.85.
It’s no surprise that CORT has an overall rating of A, which equates to Strong Buy in our proprietary rating system.
CORT has an A grade for Quality and a B in Value. It is ranked #5 in the same industry.
In addition to the POWR Ratings highlighted above, one can access CORT’s ratings for Stability, Sentiment, Momentum, and Growth here.
Stock #1: Alkermes plc (ALKS)
Headquartered in Dublin, Ireland, ALKS is a biopharmaceutical company that researches, develops, and commercializes pharmaceutical products to address unmet medical needs of patients in the fields of neuroscience and oncology in the United States, Ireland, and internationally.
On November 15, ALKS announced that it had completed the separation of its oncology business into Mural Oncology plc (Mural Oncology), a new, independent, publicly traded company. ALKS is now a pure-play, profitable neuroscience company that will continue its work to develop innovative medicines for people living with difficult-to-treat psychiatric and neurological disorders.
ALKS’s trailing-12-month gross profit margin of 85.11% is 49.7% higher than the industry average of 56.84%. Its trailing-12-month asset turnover ratio of 0.75x is 91.1% higher than the industry average of 0.39x.
For the fiscal third quarter that ended September 30, 2023, ALKS’s total revenues increased 51% year-over-year to $380.94 million. Its net income came in at $47.76 million, compared to a loss of $63.97 million in the previous-year quarter. Also, its earnings per ordinary share came in at $0.29, compared to negative $0.39 in the previous-year quarter.
The company’s revenue for the fiscal fourth quarter ending December 2023 is expected to increase 20.7% year-over-year to $367.78 million. The company’s EPS is estimated to grow 269.9% year-over-year to $0.52 for the same quarter. Moreover, the company has surpassed the consensus revenue estimates in each of the trailing four quarters, which is remarkable.
Over the past month, the stock has gained 11.6%, closing the last trading session at $26.56.
ALKS’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which equates to Strong Buy in our proprietary rating system.
ALKS has an A grade for Value and Quality and a B in Growth and Sentiment. It is ranked #7 in the same industry.
Click here to access the additional ALKS ratings (Momentum and Stability).
What To Do Next?
Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today’s volatile markets:
3 Stocks to DOUBLE This Year >
ALKS shares were trading at $27.12 per share on Wednesday morning, up $0.56 (+2.11%). Year-to-date, ALKS has gained 3.79%, versus a 22.98% 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.
3 A-Rated Biotech Stocks for Your 2024 Portfolio StockNews.com
