In the rapidly advancing field of biotechnology, consistent technological innovations, escalating merger and acquisition activities, and advancing product pipelines are fueling significant growth. This sector's robust prospects are further strengthened by unwavering demand, assuring its continuance into the future.
Against this backdrop, investors might want to add biotech stocks Acorda Therapeutics, Inc. (ACOR), Organogenesis Holdings Inc. (ORGO), and Equillium, Inc. (EQ) to the watchlist in 2024 to capitalize on the industry tailwinds.
Already noted for its profound impact on various aspects of daily life – from public health and pharmaceuticals to food and agriculture, bioenergy, industry-specific applications, and information technology – the sweeping influence of the biotech industry cannot be understated.
Undeniably, the industry remains at the forefront of innovation and is a fundamental pillar of the global economy. This truth was further underscored during the pandemic. Its profitable applications further solidify the industry's resilient position for potential growth and progress.
The biotech industry demonstrated a strong resurgence in early 2024 and looks ready to emerge like a phoenix from the ashes. This revival is characterized by biotech stocks and ETFs reaching new one-year peaks. The upward trend is fueled by multibillion-dollar agreements, positive clinical outcomes, and advanced medical developments such as gene editing.
Moreover, government initiatives play a pivotal role in strengthening the industry's sustainability, particularly by enhancing research and development pursuits. The proposed 2023 Budget has allocated $5 billion to the Advanced Research Projects Agency for Health (ARPA-H). This funding is set to prompt biomedical breakthroughs on various scales, from molecular to societal, thereby guaranteeing the production of revolutionary treatment options for patients.
The investors’ interest in biotech stocks is reflected by the SPDR S&P Biotech ETF’s (XBI) impressive 15.2% gains over the past year. Moreover, it gained 4.8% year-to-date.
The global biotechnology market is expected to grow at a CAGR of 20.4% to reach $4.15 trillion by 2030.
Considering these conducive trends, let's take a look at the fundamentals of the three Biotech stocks, starting with number 3.
Stock #3: Acorda Therapeutics, Inc. (ACOR)
ACOR, a biopharmaceutical company, develops and commercializes therapies for neurological disorders in the U.S.
ACOR’s trailing-12-month levered FCF margin of 29.39% is significantly higher than the industry average of 0.29%. Likewise, its trailing-12-month cash per share of $26.14 is significantly higher than the industry average of $1.24.
ACOR’s trailing-12-month EV/Sales of 1.54x is 59.8% lower than the industry average of 3.83x. Its trailing-12-month Price/Sales multiple of 0.16x is 95.9% lower than the industry average of 3.98x.
For the fiscal third quarter that ended September 30, 2023, ACOR’s total revenues stood at $27.72 million. The company reported INBRIJA worldwide net revenue of $9.45 million, a 6.8% increase, of which $8.09 million was derived from sales in the U.S., a 3.1% increase in the prior-year quarter. Its ex-U.S. INBRIJA net revenue of $1.36 million related to sales in Spain.
ACOR witnessed a 32% year-over-year increase in new INBRIJA prescription requests in the third quarter of 2023. New prescription requests have increased by 38% in the first three quarters of 2023 versus the same period in 2022. Moreover, its adjusted operating expenses declined marginally from the year-ago quarter to $24.36 million.
The stock has gained 41.7% over the past three months to close the last trading session at $14.23. Over the past nine months, it has gained 31.7%.
ACOR’s POWR Ratings reflect its positive prospects. The stock has an overall B rating, equating to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has an A grade for Growth and a B for Value. Within the Biotech industry, it is ranked #30 out of 637 stocks.
To see additional POWR Ratings for Momentum, Stability, Sentiment, and Quality for ACOR, click here.
Stock #2: Organogenesis Holdings Inc. (ORGO)
ORGO, a regenerative medicine company, develops, manufactures, and commercializes solutions for the advanced wound care and surgical and sports medicine markets in the U.S.
ORGO’s trailing-12-month asset turnover ratio of 0.98x is 149.2% higher than the industry average of 0.39x. Its trailing-12-month gross profit and EBITDA margins of 76.43% and 8.11% are 34.5% and 50.3% higher than the industry averages of 56.84% and 5.40%, respectively.
ORGO’s forward EV/Sales of 1.40x is 61.9% lower than the industry average of 3.67x. Its forward Price/Sales multiple of 1.34x is 67.6% lower than the industry average of 4.13x.
For the fiscal third quarter that ended September 30, 2023, ORGO’s net revenue and gross profit stood at $108.53 million and $82.74 million, respectively. Moreover, its adjusted EBITDA increased 37.6% year-over-year to $15.97 million.
For the same quarter, its net income per share stood at $0.02, while its adjusted net income stood at $5.30 million, up 4.1% from the prior-year quarter. As of September 30, 2023, its total current assets came at $225.57 million, compared to $222.61 million as of December 31, 2022.
Street expects ORGO’s revenue and EPS in the fiscal year of 2023 (ended December 2023) to be $440.35 million and $0.04, respectively. The company surpassed consensus EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained 98.6% over the past nine months to close the last trading session at $4.33. Over the past year, it has gained 60.4%.
ORGO’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to Buy in our proprietary rating system.
ORGO has an A grade for Value and a B for Sentiment and Quality. Within the same industry, it is ranked #26.
Beyond what we’ve stated above, we have also rated the stock for Growth, Momentum, and Stability. Get all ratings of ORGO here.
Stock #1: Equillium, Inc. (EQ)
EQ is a clinical-stage biotechnology company that develops and sells products to treat severe autoimmune and inflammatory or immuno-inflammatory disorders with unmet medical needs.
In July 2023, the company’s board of directors authorized a stock repurchase program pursuant to which the company may repurchase up to $7.5 million of shares of its common stock through December 31, 2024. As of September 30, 2023, the company repurchased 298,385 shares of its common stock under the stock repurchase program for a total of $0.3 million.
EQ’s trailing-12-month levered FCF margin of 27.42% is significantly higher than the industry average of 0.29%, while its trailing-12-month asset turnover ratio of 0.82x is 109.6% higher than the industry average of 0.39x.
EQ’s trailing-12-month Price/Cash Flow of 2.54x is 84.8% lower than the industry average of 16.76x. Its forward Price/Sales multiple of 0.90x is 78.2% lower than the industry average of 4.13x.
For the fiscal third quarter that ended September 30, 2023, EQ’s revenue stood at $8.87 million, while its total operating expenses declined 5.6% from the year-ago quarter to $12.49 million.
For the nine months that ended September 30, 2023, its cash and cash equivalents increased 33.6% year-over-year to $34.38 million. As of September 30, 2023, EQ’s total current liabilities stood at $28.20 million, compared to $32.04 million as of December 31, 2022.
Street expects EQ’s revenue in the fiscal year of 2023 (ended December 2023) to increase 108.2% year-over-year to $32.82 million. The company surpassed consensus revenue estimates in each of the trailing four quarters and consensus EPS estimates in three of the trailing four quarters.
The stock has gained 29.4% over the past month to close the last trading session at $0.88. Over the past three months, it has gained 21.9%.
EQ’s robust prospects are reflected in its POWR Ratings. The stock has an overall B rating, equating to Buy in our proprietary rating system.
EQ has a B grade for Growth, Value, Sentiment, and Quality. It is ranked #23 within the same industry.
Click here for the additional POWR Ratings for EQ (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 >
ORGO shares were unchanged in premarket trading Wednesday. Year-to-date, ORGO has gained 5.87%, versus a -0.30% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
3 Biotech Stocks to Keep an Eye on in 2024 StockNews.com
