The medical industry has fared comparatively well, thanks to the rising adoption of stand-out technologies and research and development of advanced medicines to meet the growing needs of individuals.
Therefore, let us explore medical stocks Amphastar Pharmaceuticals, Inc. (AMPH), Ironwood Pharmaceuticals, Inc. (IRWD), and Voyager Therapeutics, Inc. (VYGR) now.
Healthcare is one of the world's largest and most rapidly growing industries. Vaccine developments, launching life-saving drugs, and meeting the demands of chronic diseases such as cancer, diabetes, and cardiovascular diseases, could bolster the industry.
Increased automation and artificial intelligence usage in the medical industry have helped streamline workflows, quick and convenient in-house diagnosis of health issues from a distance (Remote Patient Monitoring), and block diseases and conditions at an early stage.
Such advancements could fortify the industry in the future. As per Statista, revenue in the medical technology market is expected to grow at a CAGR of 4.7% between 2023 and 2028 to reach a market volume of $719.20 billion by 2028.
Moreover, as per WHO, there has been an increasing prevalence of non-communicable diseases, and it is feared that chronic diseases will account for 86% of the 90 million deaths each year, a staggering 90% increase in absolute numbers, since 2019.
Hence, the need for modernized healthcare services shows an uptrend. The global healthcare services market is projected to reach $21.06 trillion by 2030, growing at a CAGR of 8.3% from 2023 to 2030.
The sector is expected to be bolstered by heightened expenditure on healthcare. For 2030, the total health expenditure of the United States is expected to reach some $6.7 trillion.
Furthermore, revenue in the pharmaceuticals market is projected to reach $1.16 trillion in 2023. The market is further forecasted to exhibit a CAGR of 5.4% to reach $1.44 trillion by 2027.
Against this backdrop, fundamentally sound medical stocks AMPH, IRWD, and VYGR, with robust profitability, could be solid buys now to capitalize on the industry tailwinds.
Amphastar Pharmaceuticals, Inc. (AMPH)
AMPH is a biopharmaceutical company that manufactures, markets, and sells generic and proprietary injectable, inhalation, and intranasal products in the United States, China, and France. The company operates through two segments, Finished Pharmaceutical Products and Active Pharmaceutical Ingredient.
On April 24, Eli Lilly and Company (LLY) and AMPH entered into a definitive agreement for LLY to divest BAQSIMI worldwide to AMPH to continue expanding the availability of BAQSIMI. The acquisition would integrate AMPH’s core strategic vision of strengthening its proprietary products profile and enhancing its diabetes portfolio offering.
AMPH's president and CEO, Jack Zhang, Ph.D., commented, “We are optimistic about BAQSIMI's growth potential as it is the first and only commercial intra-nasal glucagon demonstrated to treat low blood sugar emergencies."
In terms of forward non-GAAP P/E, AMPH is trading at 19.02x, 3.9% lower than the industry average of 19.79x. Its forward Price/Sales multiple of 3.68 is 16.2% lower than the industry average of 4.40.
AMPH’s trailing-12-month EBITDA margin of 27.97% is significantly higher than the industry average of 2.18%. Likewise, its trailing 12-month ROCE, ROTC, and ROTA of 18.12%, 12.07%, and 12.04% compare to the industry averages of negative 42.96%, 23.27%, and 33.39%, respectively.
For the fiscal first quarter that ended March 31, 2023, AMPH’s net revenues and gross profit increased 16.3% and 32.3% year-over-year to $140.02 million and $73.84 million, respectively. The company’s income from operation for the same quarter stood at $33.43 million, up 54.7% from the year-ago quarter.
Moreover, AMPH’s non-GAAP net income and non-GAAP net income per share grew 30.7% and 31.9% year-over-year to $32.14 million and $0.62, respectively.
Analysts expect AMPH’s revenue and EPS for the fiscal second quarter (ending June 2023) to increase 11.6% and 43.6% year-over-year to $137.73 million and $0.56, respectively. The company topped consensus revenue estimates in three of the trailing four quarters, which is impressive.
Over the past six months, shares of AMPH have gained 55.6% to close the last trading session at $45.91. Over the past three months, it has gained 30.1%.
AMPH’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The company has a B grade for Growth, Sentiment, and Quality. Within the 168-stock Medical - Pharmaceuticals industry, it is ranked #14.
To see the additional POWR Ratings of AMPH for Value, Momentum, and Stability, click here.
Ironwood Pharmaceuticals, Inc. (IRWD)
IRWD, a healthcare company, focuses on the development and commercialization of gastrointestinal (GI) products. The company has strategic partnerships with AbbVie Inc., AstraZeneca AB, and Astellas Pharma Inc. for developing and commercializing linaclotide.
On May 22, IRWD and VectivBio Holding AG (VECT), a clinical-stage biopharmaceutical company, announced that they had entered into a definitive agreement for VECT’s acquisition for an estimated aggregate consideration of approximately $1 billion, net of VECT cash and debt. The acquisition should be an ideal strategic fit and enhance IRWD’s growth prospects.
IRWD’s forward EV/EBITDA and EV/Sales multiples of 5.87 and 3.33 are 55% and 12.6% lower than the industry average of 13.04 and 3.81, respectively. Likewise, its forward EV/EBIT of 5.77x is 64.5% lower than the industry average of 16.27x.
IRWD’s trailing-12-month gross profit margin of 88.90% is 59.4% higher than the industry average of 55.77%. Its trailing-12-month EBITDA margin of 60.88% is significantly higher than the industry average of 2.18%.
IRWD’s total revenues and income from operations increased 6.7% and 3.9% year-over-year to $104.06 million and $60.10 million for the fiscal first quarter that ended March 31, 2023.
The company’s adjusted EBITDA increased 3.7% year-over-year to $60.38 million. Also, its non-GAAP net income and net income per share came in at $45.70 million and $0.25, up 20% and 19% year-over-year, respectively.
The company’s total current assets stood at $866.37 million as of March 31, 2023, compared to $780.63 million as of December 31, 2022.
For the fiscal second quarter ending June 2023, analysts expect IRWD’s revenue and EPS to increase 6.7% and 17.5% year-over-year to $103.72 million and $0.25, respectively. It surpassed consensus EPS estimates in three of the four trailing quarters.
IRWD’s shares gained 2.1% intraday to close its last trading session at $11.51. The stock has gained 7.9% over the past month.
IRWD’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
IRWD has an A grade for Value and Quality and a B for Momentum. Within the Medical – Pharmaceuticals industry, it is ranked #17.
Click here for the additional POWR Ratings for Growth, Stability, and Sentiment for IRWD.
Voyager Therapeutics, Inc. (VYGR)
VYGR, a gene therapy company, focuses on developing treatments and next-generation platform technologies. The company’s lead clinical candidate is the VY-AADC, which is in an open-label Phase 1 clinical trial for treating Parkinson’s disease.
In March, VYGR announced that Novartis AG (NVS) exercised its options to license novel capsids against two undisclosed neurologic disease targets.
VYGR received a $25 million option exercise payment and is eligible to receive up to $600 million in associated potential development, regulatory, and commercial milestone payments, and mid to high-single-digit tiered royalties based on net sales of NVS products incorporating the licensed capsids.
This demonstrates VYGR’s pipeline and platform value and strength in its balance sheet.
VYGR’s trailing-12-month asset turnover ratio of 0.68x is 93.6% higher than the 0.35x industry average. Its trailing-12-month EBITDA margin of 51.30% is significantly higher than the 2.18% industry average.
In terms of forward EV/Sales, VYGR is trading at 1.89x, 50.4% lower than the 3.81x industry average. Likewise, its forward EV/EBITDA and Price/Sales of 5.23x and 3.49x are 59.9% and 20.6% lower than the industry averages of 13.04x and 4.40x.
During the fiscal first quarter that ended March 31, 2023, VYGR’s collaboration revenue increased significantly year-over-year to $150.48 million. The company’s operating income for the quarter stood at $122.88 million, compared to an operating loss of $21.35 million in the previous-year quarter.
Its comprehensive income and net income per share stood at $124.13 million and $2.94, compared to a comprehensive loss and net loss per share of $21.40 million and $0.56, respectively, in the year-ago quarter.
For the fiscal year ending December 2023, VYGR’s revenue is expected to increase 282.9% year-over-year to $158.64 million, while its EPS is expected to come in at $1.08, respectively.
VYGR’s shares have gained 122.1% over the past year to close its last trading session at $12.59. Over the past month, the stock has gained 56.2%.
It’s no surprise that VYGR has an overall A rating, which equates to a Strong Buy in our POWR Ratings system.
VYGR has an A grade for Value and Quality and a B for Momentum and Sentiment. The stock is ranked #16 within the same industry.
To access VYGR’s grades for Growth and Stability, click here.
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AMPH shares were trading at $46.19 per share on Thursday morning, up $0.28 (+0.61%). Year-to-date, AMPH has gained 64.85%, versus a 12.35% 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 Quality Medical Stocks to Explore StockNews.com
