The biotech industry witnessed solid growth amid the pandemic. Moreover, amid a worldwide aging population and rising chronic ailments, the demand for biotech research and development is expected to see an uptrend.
On September 12, 2022, President Joe Biden launched a new initiative to encourage biotech production and research in the United States. In addition, the U.S. Department of Health and Human Services is expected to invest $40 million to foster biomanufacturing for active pharmaceutical ingredients, antibiotics, and other essential medicinal requirements.
Furthermore, the global biotechnology market is projected to grow at a CAGR of 15.5% from 2022 to 2030. Investors’ interest in the biotech sector is evident from the SPDR S&P Biotech ETF’s (XBI) 2.1% returns 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 buys for the upcoming quarters. However, fundamentally weak Intra-Cellular Therapies Inc. (ITCI) 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 October 6, 2022, AMGN launched a new research and development site in San Francisco’s Oyster Point, strengthening its nearly two-decade presence in the region. This move is expected to boost AMGN’s future research and development ventures.
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. This deal is expected to expand AMGN’s 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 7.3% year-over-year to $18.70 in 2023. Over the past year, the stock has gained 10.4% to close the last trading session at $233.82.
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 for Value. Within the Biotech industry, it is ranked #12 out of 387 stocks. Beyond what is stated above, we’ve also rated AMGN for Sentiment, Growth, Momentum, and Stability. Get all the AMGN ratings here.
Gilead Sciences, Inc. (GILD)
Biopharmaceutical company GILD discovers, develops, and commercializes medicines in the areas of unmet medical needs in the United States, Europe, and internationally.
On October 3, 2022, Kite, a GILD company, announced the U.S. Food and Drug Administration’s (FDA) approval of the company’s retroviral vector (RVV) manufacturing facility in Oceanside, California, for commercial production.
Christi Shaw, Kite’s CEO, said, “This milestone is several years in the making and reflects our continued commitment to, and investment in, bringing the curative intent of cell therapy to patients.”
In addition, on September 28, 2022, GILD announced that the World Health Organization extended its recommendation for the company’s product Veklury(R) (Remdesivir) to treat patients with severe COVID-19 in its most recent COVID guideline. This recognition is expected to boost the company’s product revenue.
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 ended June 30, 2022, compared to $11.61 billion for the period ended December 31, 2021.
Also, its total liabilities and equity came in at $62.87 billion for the period June 30, 2022, compared to $67.95 billion for the period ended December 31, 2021.
Street expects GILD’s EPS to increase 101.4% 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 9.5% to close the last trading session at $65.45.
GILD’s overall B rating equates to a Buy in our POWR Rating system. It has an A grade for Value and a B for Quality. The stock is ranked #10 in the same industry. We’ve also rated GILD for Stability, Growth, Sentiment, and Momentum. Get all the 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.
In September, BIIB announced that the European Medicines Agency (EMA) had accepted the Marketing Authorization Application (MAA) for BIIB800, a biosimilar candidate referencing RoACTEMRA®1 (tocilizumab), an anti-interleukin-6 receptor monoclonal antibody. This is expected to be a valuable treatment option upon approval.
On July 26, 2022, the FDA approved BIIB’s New Drug Application for tofersen, an experimental drug for superoxide dismutase 1 (SOD1) amyotrophic lateral sclerosis (ALS). This marks a milestone achievement for the company.
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 ended 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 month, the stock has gained 33.5% to close the last trading session at $261.69.
BIIB’s overall A rating equates to a Strong Buy in our POWR Rating system. It has an A grade for Value and Quality and a B for Sentiment. The stock is ranked #2 in the same industry. We’ve also rated BIIB for Stability, Momentum, and Growth. Get all the BIIB ratings here.
Stock to Avoid:
Intra-Cellular Therapies Inc. (ITCI)
ITCI is a biopharmaceutical company that develops novel drugs for treating neuropsychiatric and neurologic diseases by targeting intracellular signaling mechanisms within the central nervous system.
On August 22, 2022, The Goldman Sachs Group Inc. (GS) downgraded ITCI from a “buy” rating to a “neutral” rating.
ITCI’s net loss came in at $86.60 million for the second quarter that ended June 30, 2022, up 26% year-over-year. The company’s loss per share came in at $0.92, up 8.2% year-over-year.
ITCI has missed EPS estimates in three of the four trailing quarters. Over the past six months, the stock has lost 25% to close the last trading session at $47.46.
ITCI’s overall D rating equates to a Sell in our POWR Rating system. Also, it has a D grade for Stability, Momentum, and Quality. Click here to access the ITCI ratings for Value, Growth, and Sentiment. It is ranked #177 in the same industry.
AMGN shares were trading at $231.30 per share on Thursday afternoon, down $2.52 (-1.08%). Year-to-date, AMGN has gained 5.34%, versus a -20.24% 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.
3 Biotech Stocks to Buy for Q4 and 1 to Avoid StockNews.com
