The burgeoning field of personalized medicine, the emergence of orphan medications, revolutionary biotech instruments, and resolute government support are all significant contributors to the biotech industry's astounding expansion.
In light of this, fundamentally sound biotech stocks, Organogenesis Holdings Inc. (ORGO), Innoviva, Inc. (INVA), and Vertex Pharmaceuticals Incorporated (VRTX), could hold great potential as ideal additions to your portfolio at this juncture. Before delving into the highlighted stocks, let's examine the factors driving the industry's growth.
The rise of personalized medicine and the growing accessibility of orphan drug formulations are opening new horizons in the biotech sector. Year-to-date, the FDA's CDER has approved 55 groundbreaking molecular entities and therapeutic biological products, highlighting the industry's robust research and development drive.
Integrated with technological advancements, innovative biotech tools like brain mapping, autonomous therapeutic systems, cellular anti-aging research, gene editing, living medicines, lab-grown organs, epigenetics, digital therapeutics, and advanced wearables are driving significant growth within the industry.
Moreover, the sector is receiving extensive support from the government, as evidenced by the 2023 budget, which allocated $5 billion to the Advanced Research Projects Agency for Health (ARPA-H). The funding aims to expedite biomedical innovations across molecular to societal dimensions, ultimately providing groundbreaking solutions for patients.
According to Precedence Research, the global biotechnology market is expected to be worth approximately $3.21 trillion by 2030 and poised to grow at a CAGR of 12.8% between 2023 and 2030. In light of these encouraging trends, let’s look at the fundamentals of the three best Biotech stocks, beginning with number 3.
Stock #3: Organogenesis Holdings Inc. (ORGO)
ORGO develops, manufactures, and markets solutions for advanced wound care, surgical, and sports medicine sectors. Its clientele includes hospitals, wound care centers, government facilities, ambulatory service centers, and physician offices, served through adept direct sales representatives and independent agencies.
The stock’s trailing-12-month gross profit margin of 76.43% is 34% higher than the industry average of 57.02%. Its EBITDA margin of 8.11% is 60.3% higher than the 5.06% industry average. Moreover, the stock’s trailing-12-month CAPEX/Sales of 7.06% is 66.8% higher than the industry average of 4.23%.
For the fiscal 2023 third quarter that ended September 30, 2023, ORGO’s income from operations rose 352.5% year-over-year to $8.05 million. Its adjusted EBITDA grew 37.6% from the year-ago value to $15.97 million.
Additionally, the company’s adjusted net income increased 4.1% from the prior year’s quarter to $5.30 million, while net income per share stood at $0.02. As of September 30, 2023, ORGO’s total assets amounted to $462.65 million, up from $449.36 million as of December 31, 2022.
The consensus revenue estimate of $457.07 million for the fiscal year ending December 2024 indicates a 3.8% year-over-year rise. Likewise, the consensus EPS estimate of $0.05 for the ongoing year period is estimated to grow 25% from the prior year. Moreover, the company surpassed the consensus EPS estimates in three of four trailing quarters.
Shares of ORGO have gained 37.3% over the past year, closing the last trading session at $3.55.
ORGO’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
ORGO has an A grade for Value and a B for Sentiment and Quality. It is ranked #23 out of 348 stocks within the Biotech industry.
In addition to the POWR Ratings I’ve highlighted, you can see ORGO’s Growth, Momentum, and Stability ratings here.
Stock #2: Innoviva, Inc. (INVA)
INVA develops and commercializes pharmaceutical products. Its portfolio features RELVAR/BREO ELLIPTA, a daily combination medication with a LABA, vilanterol (VI), an inhaled corticosteroid (ICS), and fluticasone furoate; and ANORO ELLIPTA, a once-daily medication blending a long-acting muscarinic antagonist (LAMA) and more.
On November 1, 2023, Innoviva Specialty Therapeutics, a subsidiary of INVA, partnered with The Global Antibiotic Research & Development Partnership (GARDP) to announce the success of zoliflodacin, a groundbreaking antibiotic, in a global Phase 3 clinical trial. The trial demonstrated its efficacy as an oral alternative, potentially transforming gonorrhea treatment and reinforcing INVA's leadership in infectious disease solutions.
On September 18, 2023, Innoviva Specialty Therapeutics unveiled the availability of XACDURO® in the United States. Targeting patients aged 18 and above, it addresses hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia caused by Acinetobacter baumannii-calcoaceticus complex (Acinetobacter).
The introduction of XACDURO would enrich INVA's critical care medicine portfolio, affirming its dedication to offering healthcare professionals distinctive therapeutic choices and enhancing patient outcomes in this domain.
INVA’s trailing-12-month gross profit margin of 77.71% is 36.3% higher than the industry average of 57.02%. Its EBITDA margin of 48.80% is 864.1% higher than the 5.06% industry average. Additionally, the stock’s trailing-12-month cash per share of $2.98 compares to the $1.27 industry average.
For the fiscal 2023 third quarter that ended September 2023, INVA’s total revenue stood at $67.26 million. Its net income and net income per share attributable to INVA stockholders came in at $82.05 million and $0.90, respectively, during the quarter. Also, as of September 30, 2023, the company’s total assets amounted to $1.19 billion.
Analysts expect INVA’s revenue to increase 6.4% year-over-year to $319.47 million for the fiscal year ending December 2024. Also, the company surpassed the consensus revenue estimates in three of four trailing quarters. The stock has gained 23.6% over the past six months and 31.5% over the past year, closing the last trading session at $16.34.
INVA’s sound outlook is apparent in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.
INVA has a B grade for Value and Quality. It is ranked #20 out of 348 stocks within the Biotech industry.
Click here to access additional INVA ratings for Growth, Momentum, Stability, and Sentiment.
Stock #1: Vertex Pharmaceuticals Incorporated (VRTX)
VRTX develops and commercializes therapies for Cystic Fibrosis (CF). It markets TRIKAFTA/KAFTRIO and SYMDEKO/SYMKEVI for individuals with CF aged six years or older with at least one F508del mutation. Additionally, it offers ORKAMBI for CF patients aged two years or older with homozygous F508del mutation.
On January 16, VRTX announced the FDA approval of CASGEVY™, a groundbreaking CRISPR/Cas9 gene-edited cell therapy, for treating transfusion-dependent beta-thalassemia (TDT) in patients aged 12 and above. Following the historic approval for sickle cell disease, this achievement secured well before the PDUFA date signifies a significant stride in providing new curative options for TDT patients.
With CASGEVY, VRTX stands to gain both commercially and reputationally, as the therapy represents a significant advancement in providing transformative solutions for individuals with TDT.
The stock’s trailing-12-month gross profit margin of 61.60% is 8% higher than the industry average of 57.02%. Moreover, its EBIT margin of 45.67% compares with the 0.04% industry average. Furthermore, VRTX’s trailing-12-month asset turnover ratio of 0.50x is 27.5% higher than the industry average of 0.39x.
For the fiscal 2023 third quarter that ended on September 30, 2023, VRTX’s product revenues increased 6.4% year-over-year to $2.48 billion. Its non-GAAP net income and non-GAAP net income per common share grew 2.3% and 1.7% from the prior year’s period to $1.06 billion and $4.08, respectively.
As of September 30, 2023, the company’s cash, cash equivalents, and marketable securities amounted to $11.93 billion, up from $10.78 billion as of December 31, 2022.
The consensus revenue estimate of $9.87 billion for the fiscal year that ended December 2023 indicates a 10.5% year-over-year rise. Likewise, the consensus EPS estimate of $15.07 for the same period is estimated to grow 1.3% from the prior year. Moreover, the company topped the consensus EPS estimates in all four trailing quarters.
Shares of VRTX have gained 19.8% over the past six months and 36.4% over the past year, closing the last trading session at $427.56.
VRTX’s strong prospects are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
VRTX has an A grade for Quality and a B for Value and Sentiment. It is ranked #9 out of 348 stocks within the same industry.
Click here to access the additional VRTX ratings (Growth, Momentum, and Stability).
What To Do Next?
Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these “death trap” stocks are lurking in your portfolio:
VRTX shares were trading at $428.71 per share on Thursday morning, up $1.15 (+0.27%). Year-to-date, VRTX has gained 5.36%, versus a 2.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
3 Lucrative Biotech Stock Buys for Success StockNews.com
