Since the onset of the COVID-19 pandemic, substantial government and private investments in developing vaccines and treatments to fight the virus have helped the biotech industry grow significantly. Continued breakthroughs to treat chronic diseases and increasing demand from an aging population should keep driving the industry’s growth. Moreover, biotech companies are integrating advanced technologies in the drug development process, which should help them generate high profits. The global biotechnology market is expected to grow at an 8.7% CAGR to reach $1.68 trillion by 2030.
Although the recent market sell-offs due to the expected aggressive interest rate hikes and continued geopolitical tensions have recently caused biotech stocks to witness a dip, surging demand for biotech products and impressive breakthroughs should allow these stocks to rebound soon.
We think now is a good time for investors to consider adding these four fundamentally sound biotech stocks to their portfolios: Amgen Inc. (AMGN), Vertex Pharmaceuticals Incorporated (VRTX), BioNTech SE (BNTX), and Corcept Therapeutics Incorporated (CORT).
Amgen Inc. (AMGN)
AMGN is a biotechnology company that discovers, develops, manufactures, and delivers human therapeutics focused on inflammation, oncology/hematology, bone health, cardiovascular disease, nephrology, and neuroscience areas worldwide. The company distributes its products through pharmaceutical wholesale distributors and direct-to-consumer channels.
On April 18, 2022, AMGN announced preliminary results from a Phase 3 study evaluating the efficacy and safety of ABP 654 compared to STELARA in adult patients with plaque psoriasis. The study met the primary efficacy endpoint, demonstrating no clinically meaningful differences between ABP 654 and STELARA. Being developed as a biosimilar candidate to STELARA, this clinical data will enable ABP 654 to gain a wider market reach going forward.
For its fiscal 2022 second quarter ended December 31, 2021, AMGN’s total revenues increased 3.2% year-over-year to $6.85 billion. The company’s non-GAAP operating income came in at $3 billion for the quarter, up 9.9% from the prior-year period. While its non-GAAP net income increased 21.7% year-over-year to $2.46 billion, its non-GAAP EPS grew 26% to $4.36. As of December 31, 2021, the company had $7.99 billion in cash and cash equivalents.
The consensus EPS estimate of $17.63 for fiscal 2022 ending December 31, 2022, represents a 3.1% year-over-year improvement. It surpassed the consensus EPS estimates in three of the four trailing quarters. Analysts expect the company’s revenue to reach $26.14 billion for the same fiscal year, indicating a 0.6% rise from the prior-year period. AMGN’s EPS is expected to grow at a 7.2% rate per annum over the next five years. Over the past three months, the stock has gained 12.3% and closed yesterday’s trading session at $249.87, down 3.5% from its 52-week high of $258.81.
AMGN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates 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 Quality. Click here to see the additional ratings for AMGN’s Growth, Momentum, Value, Sentiment, and Stability.
AMGN is ranked #11 of 402 stocks in the Biotech industry.
Vertex Pharmaceuticals Incorporated (VRTX)
VRTX develops, manufactures, and commercializes medicines for serious diseases. The company is focused on developing and commercializing therapies to treat cystic fibrosis (CF) and advancing its research and early-stage development programs. It sells its products primarily to specialty pharmacies and specialty distributors in the United States and specialty distributors and retail chains and hospitals and clinics internationally.
On April 20, 2022, Health Canada, the department of the Government of Canada responsible for national health policy, granted Marketing Authorization for the expanded use of VRTX’s TRIKAFTA among children aged 6-11 years with cystic fibrosis (CF) with at least one F508del mutation. This approval should help TRIKAFTA gain wide market reach in the coming months.
For its fiscal 2021 fourth quarter ended December 31, 2021, VRTX’s non-GAAP total revenues increased 27.4% year-over-year to $2.07 billion. The company’s non-GAAP operating income came in at $1.12 billion, up 26.8% from the prior-year period. VRTX’s non-GAAP net income came in at $865.90 million, indicating a 31% year-over-year improvement. Its non-GAAP EPS increased 34.3% year-over-year to $3.37. VRTX had cash, cash equivalents, and marketable securities of $7.53 billion as of December 31, 2021.
Analysts expect VRTX’s EPS to improve 5.7% year-over-year to $14.23 in fiscal 2022, ending December 31, 2022. The company surpassed Street EPS estimates in each of the trailing four quarters, which is impressive. The consensus revenue estimate of $8.56 billion for the same fiscal year indicates a 13.1% year-over-year improvement. VRTX’s EPS is expected to grow at a rate of 11.5% per annum over the next five years. Over the past three months, the stock has gained 18.1% and ended yesterday’s trading session at $267.69, down 8.6% from its 52-week high of $292.75.
It’s no surprise that VRTX has an overall A rating, which translates to Strong Buy in our POWR Ratings system.
It has an A grade for Quality and a B grade for Growth, Value, and Sentiment. Click here to see the additional ratings for VRTX (Stability and Momentum).
VRTX is ranked #1 in the same industry.
BioNTech SE (BNTX)
Based in Germany, BNTX develops and commercializes patient-specific immunotherapies for cancer and other infectious diseases using different scientific approaches and technology platforms. It also offers diagnostic products and drug discovery services for other therapeutic areas.
After receiving the Emergency Use Authorization (EUA) of the booster dose of the BNTX and Pfizer Inc.’s (PFE) Pfizer-BioNTech COVID-19 vaccine from the U.S. Food and Drug Administration (FDA) for individuals above 16 years of age in December 2021, on April 26, 2022, the companies submitted EUA of the Pfizer-BioNTech COVID-19 Vaccine for children 5 through 11 years of age. Based on the strong immune response from successful clinical trial studies, the approval of this EUA would help it gain wide reach amid a scenario of rising COVID-19 cases. They also plan to submit these data to the European Medicines Agency (EMA) and other regulatory agencies worldwide for authorization in the coming weeks.
For its fiscal 2021 fourth quarter ended December 31, 2021, BNTX’s total revenues increased 1501.8% year-over-year to €5.53 billion ($5.83 billion). The company’s operating income came in at €4.70 billion ($4.92 billion), representing a 1824.5% rise from the prior-year period. Its net income came in at €3.17 billion ($3.34 billion) for the quarter, indicating a 763% year-over-year improvement. BNTX’s EPS came in at €12.18, up 751.8% from the prior-year period. The company had €1.69 billion ($1.78 billion) in cash and equivalents as of December 31, 2021.
BNTX surpassed the Street EPS estimates in each of the trailing four quarters, which is impressive. Over the past three months, the stock has lost 7.9% and closed yesterday’s trading session at $147.95, down 68.1% from its 52-week high of $464.
BNTX’s POWR Ratings reflect its solid prospects. It has an overall rating of B, which equates to Buy in our proprietary rating system.
The stock has an A grade for Value and Sentiment and a B grade for Growth and Quality. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for BNTX’s Stability and Momentum here.
BNTX is ranked #16 in the same industry.
Corcept Therapeutics Incorporated (CORT)
CORT is a commercial-stage company engaged in the discovery and development of drugs that treat severe metabolic, oncologic, and neuropsychiatric disorders by modulating the effects of the hormone cortisol. The company operates through the discovery, development, and commercialization of the pharmaceutical products segment.
On April 4, 2022, CORT announced the completion of enrollment in GRATITUDE, the company’s double-blind, placebo-controlled trial of its proprietary, selective cortisol modulator miricorilant among adult patients with schizophrenia or bipolar disorder and recent antipsychotic-induced weight gain. The primary endpoint in both GRATITUDE and GRATITUDE II is reduced body weight compared to patients receiving a placebo. This study's data is expected to be released in the 2022 fourth quarter and should gain wide recognition across the industry in the coming months.
For its fiscal 2021 fourth quarter ended December 31, 2021, CORT’s revenues increased 15.3% year-over-year to $98.82 million. The company’s income from operations came in at $36.66 million for the quarter, up 20.2% from the year-ago period. While its non-GAAP net income increased 22.6% year-over-year to $42.57 million, its non-GAAP EPS grew 29.6% to $0.35. As of December 31, 2021, the company had $117.97 million in cash and investments.
Analysts expect the company’s EPS to reach $0.97 for fiscal 2022 ending December 31, 2022, representing a 9% rise from the prior-year period. It surpassed the consensus EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $413.85 billion for the same fiscal year indicates a 13.1% rise from the prior-year period.
Over the past three months, the stock has gained 27.7% and ended yesterday’s trading session at $21.91, down 14.7% from its 52-week high of $25.68.
CORT’s POWR Ratings reflect this promising outlook. It has an overall rating of A, which equates to Strong Buy in our proprietary rating system.
The stock has an A grade for Quality and a B grade for Value and Growth. Click here to see the additional ratings for CORT (Sentiment, Stability, and Momentum).
CORT is ranked #7 in the same industry.
AMGN shares were trading at $250.44 per share on Wednesday afternoon, up $0.57 (+0.23%). Year-to-date, AMGN has gained 12.28%, versus a -11.75% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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