Global drug demand is growing rapidly, fueled by a growing population worldwide, rising chronic diseases, and healthcare expenses. The biotech market is playing a crucial role and catering to the diverse global demand supported by rapid technological innovation and increasing R&D.
Against this backdrop, it could be wise to invest in fundamentally strong biotech stocks Illumina, Inc. (ILMN), Amgen Inc. (AMGN), and Entrada Therapeutics, Inc. (TRDA) with significant growth potential.
The biotech industry is evolving amid the ongoing high incidents of chronic diseases like diabetes. These factors are rapidly increasing the demand for biotechnology products coupled with trends like cell and tissue development research and development, new products in the market, and technological innovation will shape the industry.
Further, with the wide demand for highly effective drugs and treatment options, corporations engaged in the development of biotech products will benefit. The global biotechnology market is poised to grow to $3.90 trillion by 2031, expanding at a CAGR of 13.9%.
In global comparison, the U.S. biotechnology market is anticipated to reach around $763.82 billion by 2033, growing at a CAGR of 11.9%, driven by strong R&D initiatives and high healthcare expenses.
Further, with the transformation and effectiveness of today’s technology, its application is increasing more and more in drug development. FDA has recognized the increased use of artificial intelligence and machine learning (AI/ML) during the drug development life cycle and its potential to accelerate the process.
Global AI in biotechnology market is expected to grow at a CAGR of 19%, resulting in a market volume of $7.11 billion by 2031. Factors propelling the market demand include rising drug discovery and precision medicine, as well as clinical trial recruitment and retention.
Considering the encouraging economic trends, let’s delve into the fundamentals of the top three Biotech stocks, beginning with the third choice.
Stock #3: Illumina, Inc. (ILMN)
ILMN provides sequencing- and array-based solutions for genetic and genomic analysis internationally. The company operates through Core Illumina; and GRAIL segments. It offers sequencing and array-based instruments and consumables, whole-genome sequencing kits, and targeted resequencing kits.
On July 9, ILMN acquired Fluent BioSciences, developer of an emerging and highly differentiated single-cell technology. The strategic acquisition offers accessible, highly scalable single-cell technology to ILMN expanding its multiomics capabilities and broadening its customer base.
On June 24, ILMN completed GRAIL’s spin-off. This milestone follows the company’s previously announced plans to divest GRAIL, which is now a public and independent company.
During the first quarter that ended March 31, 2024, ILMN reported revenue of $1.08 billion and its non-GAAP gross profit was $716 million, up 1.8% from the prior year’s quarter. The company’s non-GAAP net income and EPS amounted to $14 million and $0.09, indicating increases of 7.7% and 12.5% year-over-year, respectively.
Furthermore, the company’s cash and cash equivalents were $1.11 billion as of March 31, 2024, versus $1.05 billion as of December 31, 2023.
Analysts expect ILMN’s revenue and EPS for the fourth quarter (ending December 2024) to grow 3.7% and 671.1% year-over-year to $1.16 billion and $1.08, respectively. Also, the company topped the consensus EPS and revenue estimates in three of the four trailing quarters.
Shares of ILMN have surged 10.9% over the past month to close the last trading session at $117.70.
ILMN’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
ILMN has a B grade for Quality, Growth, and Sentiment. It is ranked #25 out of 340 stocks in the Biotech industry.
In addition to the POWR Ratings we’ve stated above, we also have ILMN ratings for Value, Momentum, and Stability. Get all ILMN ratings here.
Stock #2: Amgen Inc. (AMGN)
AMGN discovers, develops, manufactures, and delivers human therapeutics globally. The company’s principal products include Enbrel, Otezla, Prolia, XGEVA, Repatha, Nplate, KYPROLIS, Aranesp, EVENITY, Vectibix, BLINCYTO, TEPEZZA, and KRYSTEXXA.
On June 14, AMGN announced that the FDA approved BLINCYTO to treat adult and pediatric patients one month or older with CD19-positive Philadelphia chromosome-negative B-cell precursor acute lymphoblastic leukemia in the consolidation phase.
BLINCYTO is the first and only globally approved Bispecific T-cell Engager (BiTE®) immuno-oncology therapy that targets CD19 surface antigens on B cells.
On May 16, AMGN announced that the FDA approved IMDELLTRA for treating adult patients with extensive-stage small cell lung cancer having disease progression after platinum-based chemotherapy. The approval marked a pivotal advancement for patients battling ES-SCLC.
During the first quarter that ended March 31, 2024, AMGN’s total revenues increased 22% year-over-year to $7.45 billion. Its non-GAAP operating income increased 9.1% from the year-ago value to $3.08 billion. The company’s non-GAAP net income and non-GAAP EPS came in at $2.14 billion and $3.96 for the quarter, respectively.
Additionally, the company’s cash and cash equivalents and total assets stood at $9.71 billion and $92.98 billion as of March 31, 2024.
Street expects AMGN’s revenue for the second quarter (ended June 2024) to increase 19.5% year-over-year to $8.35 billion, while its EPS is expected to grow marginally year-over-year to $5, respectively. Furthermore, the company surpassed the consensus EPS estimates in all of the trailing four quarters.
AMGN’s stock has gained 7.9% over the past month and 44.9% over the past year to close the last trading session at $333.99.
AMGN’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
The stock has a B grade for Quality. AMGN is ranked #10 among 340 stocks in the Biotech industry.
Click here to access AMGN’s ratings for Momentum, Growth, Value, Stability and Sentiment.
Stock #1: Entrada Therapeutics, Inc. (TRDA)
TRDA is a clinical-stage biotechnology company which develops endosomal escape vehicle (EEV) therapeutics for the treatment of multiple neuromuscular diseases. The company’s EEV platform develops a portfolio of oligonucleotide, antibody, and enzyme-based programs.
On June 24, TRDA reported positive preliminary data from its Phase 1 clinical trial, ENTR-601-44-101. Under the trial, ENTR-601-44 was well-taken by healthy volunteers with no serious or drug-related adverse events and no clinically significant changes or trends noted in vital signs, ECGs, physical exams or laboratory assessments.
ENTR-601-44 also showed significant plasma concentration, muscle concentration and exon skipping, at levels suggesting potential for a clinically meaningful starting dose in planned upcoming patient trials.
During the first quarter that ended March 31, 2024, TRDA’s collaboration revenue increased 134% year-over-year to $59.12 million and its income from operations was $21.11 million for the quarter. The company’s net income came in at $23.50 million or $0.68 per share, against a net loss of $6.67 million and $0.21 per share in the prior year’s quarter, respectively.
In addition, the company’s total assets were $510.84 million as of March 31, 2024, compared to $469.19 million as of December 31, 2023.
Street expects TRDA’s revenue for the second quarter (ended June 2024) to increase 153.6% year-over-year to $46.08 million and its EPS for the same period is expected to be $0.56. Also, the company has surpassed the consensus revenue estimates in each of the trailing four quarters, which is impressive.
TRDA’s stock has gained 2.7% over the past month and marginally over the past six months to close the last trading session at $14.75.
TRDA’s POWR Ratings reflect its robust outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
The stock has a B grade for Sentiment, Value, and Quality. Within the same industry, TRDA is ranked #6 among 340 stocks.
Click here to access additional ratings of TRDA for Momentum, Growth, and Stability.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
AMGN shares were trading at $325.97 per share on Monday afternoon, down $8.02 (-2.40%). Year-to-date, AMGN has gained 14.87%, versus a 9.23% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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