The biotechnology industry significantly benefited amid the pandemic and is expected to stay resilient to economic challenges due to the inelastic demand. Furthermore, the Biden Administration recently announced its plans to invest $2 billion in the U.S. biotechnology industry, brightening its prospects.
Around $40 million would be allotted to advanced bio-manufacturing, which is expected to multiply growth in the biotech sector in the coming years. Furthermore, according to Acumen Research and Consulting, the global biotechnology market is projected to grow at a CAGR of 15.5% from 2022 to 2030.
Investors' interest in the biotechnology industry is evident from the SPDR S&P Biotech ETF's (XBI) 9.6% gains over the past three months.
Given the backdrop, quality biotech stocks Amgen Inc. (AMGN), Gilead Sciences, Inc. (GILD), and Biogen Inc. (BIIB) could be ideal investments. However, the fundamentally weak stock Ampio Pharmaceuticals, Inc. (AMPE) might be best avoided.
Stocks to Buy:
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.
On August 29, 2022, AMGN presented new compelling data from the Phase 3 FOURIER open-label extension (OLE) studies of its product Repatha® (evolocumab) in adults with atherosclerotic cardiovascular disease (ASCVD). This first-of-its-kind medication has shown promising results in patients with ASCVD for more than eight years.
On August 4, 2022, AMGN and bio-pharmaceutical company ChemoCentryx, Inc. (CCXI) announced a definitive agreement by which AMGN would acquire CCXI for $52 per share in cash and a total enterprise value of approximately $3.70 billion. With this acquisition, AMGN aims to expand its consumer base in inflammation and nephrology.
AMGN's sales came in at $6.59 billion for the second quarter that ended June 30, 2022, up marginally year-over-year. Moreover, the company's net income came in at $1.32 billion, up 183.8% year-over-year. Also, its EPS came in at $2.45, up 202.5% year-over-year.
AMGN's revenue is expected to increase 4.2% year-over-year to $27.27 billion in 2023. It surpassed EPS estimates in all four trailing quarters. Its EPS is expected to increase 7.5% year-over-year to $18.72 in 2023. Over the past year, the stock has gained 8.8% to close the last trading session at $229.90.
AMGN's strong fundamentals are reflected in its POWR Ratings. The stock's overall B rating equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
AMGN has an A grade for Quality and a B grade for Value. Within the Biotech industry, it is ranked #16 out of 388 stocks.
Beyond what is stated above, we've also rated AMGN for Sentiment, Growth, Momentum, and Stability. Get all AMGN ratings here.
Gilead Sciences, Inc. (GILD)
Biopharmaceutical company GILD discovers, develops, and commercializes medicines in the areas of unmet medical need in the United States, Europe, and internationally. The company has been operating for over three decades.
On September 28, 2022, GILD announced that the World Health Organization (WHO), in its latest COVID guideline, extended its recommendation for the company's product Veklury(R) (Remdesivir) to treat patients with severe COVID-19. This acknowledgment is expected to boost the company's product revenue further.
On September 20, 2022, GILD completed its acquisition of British biotechnology company MiroBio for approximately $405 million in cash. With this acquisition, GILD is expected to gain MiroBio's proprietary discovery platform and the entire portfolio of immune inhibitory receptor agonists, which would assist GILD in achieving new heights against inflammatory diseases.
GILD's net sales came in at $6.26 billion for the second quarter that ended June 30, 2022, up marginally year-over-year. The company's current liabilities came in at $9.22 billion for the period that ended June 30, 2022, compared to $11.61 billion for the period that ended December 31, 2021.
Also, its total liabilities and equity came in at $62.87 billion for the period that ended June 30, 2022, compared to $67.95 billion for the period that ended December 31, 2021
Street expects GILD's EPS to increase 101.3% year-over-year to $1.39 for the quarter ending December 2022. It surpassed EPS estimates in three of the four trailing quarters. Over the past six months, the stock has gained 8% to close the last trading session at $63.93.
GILD's overall B rating equates to a Buy in our POWR Ratings system. It has an A grade for Value and a B grade for Quality. The stock is ranked #15 in the same industry.
We've also rated GILD for Stability, Growth, Sentiment, and Momentum. Get all GILD ratings here.
Biogen Inc. (BIIB)
BIIB discovers, develops, manufactures, and delivers therapies for treating neurological and neurodegenerative diseases. It offers TECFIDERA, VUMERITY, AVONEX, PLEGRIDY, TYSABRI, and FAMPYRA for multiple sclerosis (MS), SPINRAZA for spinal muscular atrophy, and FUMADERM to treat plaque psoriasis.
On July 26, 2022, the U.S. Food and Drug Administration accepted BIIB's New Drug Application for tofersen, an experimental drug for superoxide dismutase 1 (SOD1) amyotrophic lateral sclerosis (ALS).
Priya Singhal, M.D., M.P.H., Head of Global Safety and Regulatory Sciences and Interim Head of R&D at BIIB, said, "If approved, tofersen will be the first treatment to target a genetic cause of ALS, and we hope this will pave the way for further advances in this relentless disease."
BIIB's net income came in at $1.06 billion for the second quarter that ended June 30, 2022, up 135.9% year-over-year. Moreover, its EPS came in at $7.24, up 142.1% year-over-year. Its total assets came in at $25.08 billion for the period June 30, 2022, compared to $23.88 billion for the period ended December 31, 2021.
BIIB's EPS is expected to increase 5.3% year-over-year to $3.57 for the quarter ending December 2022. It surpassed EPS estimates in three of four trailing quarters. Over the past three months, the stock has gained 36.6% to close the last trading session at $276.61.
BIIB's overall A rating equates to a Strong Buy in our POWR Ratings system. It has an A grade for Value and Quality and a B for Sentiment. The stock is ranked first in the same industry.
We've also given BIIB ratings for Stability, Momentum, and Growth. Get all BIIB ratings here.
Stock to Sell:
Ampio Pharmaceuticals, Inc. (AMPE)
Biopharmaceutical company AMPE focuses on developing immunomodulatory therapies for treating pain from osteoarthritis in the United States.
On September 29, 2022, Levi & Korsinsky, LLP notified investors in AMPE of a class action securities lawsuit, which aims to reconcile losses on behalf of AMPE investors who were adversely affected by alleged securities fraud.
AMPE’s general and administrative expenses came in at $3.25 million for the second quarter ended June 30, 2022, up 131.8% year-over-year. Its cash and cash equivalents came in at $22.89 million for the period ended June 30, 2022, compared to $33.89 million for the period ended December 31, 2021.
Moreover, its total current assets came in at $24.64 million compared to $35.63 million for the same period.
AMPE's EPS is estimated to decrease by 12.5% per annum for the next five years. Over the past year, the stock has lost 96.2% to close the last trading session at $0.06.
AMPE’s POWR Ratings are consistent with this bleak outlook. The stock has an overall D grade, equating to a Sell in our proprietary rating system. Also, it has an F grade for Quality and a D for Momentum. It is ranked #308 in the Biotech industry. Click here to access AMPE ratings for Growth, Value, Stability, and Sentiment.
AMGN shares were trading at $228.41 per share on Thursday afternoon, down $2.57 (-1.11%). Year-to-date, AMGN has gained 4.02%, versus a -22.73% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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