Despite macroeconomic challenges, the biotech industry performed relatively well due to inelastic demand for its products and services. Moreover, government initiatives, technological developments, and the biotech ingredients market, which assists businesses in making correct and up-to-date decisions, are all fueling the biotech industry’s expansion.
So, investors could consider buying shares of Vertex Pharmaceuticals Incorporated (VRTX), Biogen Inc. (BIIB), Exelixis, Inc. (EXEL), and Cidara Therapeutics, Inc. (CDTX) in 2023.
The industry is benefiting from government efforts. Last year, the Biden administration announced a $2 billion investment in biotech and biomanufacturing activities, with the Department of Defense allocating $1 billion, mostly for manufacturing facilities in the United States.
The Biden Administration’s National Biotechnology and Biomanufacturing Initiative is expected to boost the industry.
Additionally, the Biotech Ingredients market is an important resource for businesses to acquire key data about their target markets, competitors, and industry trends. Companies need accurate and up-to-date information to make informed decisions and stay ahead of the competition in today’s increasingly complicated global business climate.
The Biotech Ingredients market is anticipated to grow at a CAGR of 9% during 2022 to 2030. In addition, the global biotechnology market is expected to grow at a CAGR of 14.2% until 2028.
Investors’ interest in biotech stocks is evident from the VanEck Vectors Biotech ETF (BBH) 7.8% gains over six months.
So, let’s delve deeper into the stocks mentioned above:
Vertex Pharmaceuticals Incorporated (VRTX)
Biotechnology company VRTX develops and commercializes therapies for treating cystic fibrosis.
On March 9, 2023, VRTX announced that the US Food and Drug Administration (FDA) approved the Investigational New Drug Application (IND) for VX-264 to treat type 1 diabetes (T1D). Because this application does not require the use of immunosuppression, it has the potential to reach a larger group of patients with T1D.
In terms of forward EV/EBIT multiple, VRTX is trading at 14.27 is 10.5% lower than the industry average of 15.94.
VRTX’s trailing-12-month gross profit margin of 59.60% is 6.2% higher than the industry average of 56.13%, while its trailing-12-month EBITDA margin of 50.69% is substantially higher than the industry average of 3.35%.
VRTX’s net product revenues came in at $2.30 billion for the fourth quarter that ended December 31, 2022, up 11.1% year-over-year. Its non-GAAP net income increased 25.9% year-over-year to $978 million, while its non-GAAP EPS came in at $3.76, up 24.5% year-over-year.
The consensus revenue estimate of $9.71 billion for the year ending 2023 represents an 8.7% increase year-over-year. Its EPS is expected to rise 5.8% per annum for the next five years. It surpassed EPS estimates in all four trailing quarters. VRTX shares have gained 22.8% over the past year to close the last trading session at $304.75.
VRTX’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. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
VRTX has an A grade for Quality and a B for Value, and Sentiment. Within the Biotech industry, it is ranked #4 out of 383 stocks. Click here for the additional POWR Ratings for Momentum, Stability, and Growth for VRTX.
Biogen Inc. (BIIB)
BIIB discovers, develops, manufactures, and delivers therapies for treating neurological and neurodegenerative diseases.
In terms of forward EV/EBITDA multiple, BIIB is trading at 11.71 is 8.3% lower than the industry average of 12.76. In addition, BIIB’s forward EV/EBIT of 14.07x is 11.8% lower than the industry average of 15.94x.
BIIB’s trailing-12-month EBITDA margin of 34.73% is 937.6% higher than the industry average of 3.35%. Its trailing-12-month ROCE is 25.08% compares to the industry average of negative 39.46%.
For the fourth quarter that ended December 31 2022, 1, 2022, BIIB’s total cost and expenses decreased 16.7% year-over-year to $1.94 billion. Its total non-GAAP net income increased 17.3% year-over-year to $587.20 million. Also, its non-GAAP EPS came in at $4.05, representing a 19.5% increase from the prior-year quarter.
BIIB’s EPS is expected to increase 6.3% year-over-year to $16.51 in 2024. It surpassed EPS estimates in three of four trailing quarters. Over the past six months, the stock has gained 34.1% to close the last trading session at $265.17.
BIIB has an overall A rating, equating to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Value and a B for Growth, Sentiment and Quality. BIIB is ranked #2 in the same industry. Beyond what is stated above, we’ve also rated BIIB for Momentum and Stability. Get all the BIIB ratings here.
Exelixis, Inc. (EXEL)
Oncology-based biotech company EXEL focuses on discovering, developing, and commercializing new medicines to treat cancers in the United States.
EXEL’s forward EV/Sales of 2.65x is 27.7% lower than the industry average of 3.66x. Its forward Price/Sales of 3.25x is 19.1% lower than the industry average of 4.02x.
EXEL’s trailing-12-month gross profit margin of 96.41% is 71.7% higher than the industry average of 56.13%. Its trailing-12-month EBITDA margin of 13.80% is 312.4% higher than the industry average of 3.35%.
In the fourth quarter that ended December 31, 2022, EXEL’s net product revenue increased 24.7% year-over-year to $377.42 million. Its interest income grew 1078.9% from the prior-year quarter to $16.99 million in the same quarter.
Street expects EXEL’s revenue to increase 13.7% year-over-year to $1.83 billion in 2023. Its EPS is expected to increase by 10.7% year-over-year to $0.16 in 2023. The stock has gained 12.6% over the past six months to close the last trading session at $18.33.
It’s no surprise that EXEL has an overall B rating, which indicates a Buy in our proprietary rating system.
It has a B grade for Value and Quality. EXEL is ranked #30 in the same industry. To see additional EXEL ratings for Growth, Momentum, Stability, and Sentiment, click here.
Cidara Therapeutics, Inc. (CDTX)
Biotechnology company CDTX focuses on the discovery, development, and commercialization of long-acting anti-infectives for treating and preventing infectious diseases and oncology in the United States.
On February 1, 2023, CDTX and WuXi XDC, a leading global CRDMO dedicated to end-to-end bioconjugates services, announced an expansion of their current relationship in which WuXi XDC would offer IND-enabling chemical, manufacturing, and controls (CMC) development services for Cidara’s CD73 cancer DFC program.
CDTX’s forward EV/Sales of 1.44x is 60.8% lower than the industry average of 3.66x. Its forward Price/Sales of 1.91x is 52.5% lower than the industry average of 4.02x.
CDTX’s trailing-12-month asset turnover ratio of 1.05% is 205.1% higher than the industry average of 0.34%.
CDTX’s total revenues came in at $10.22 million for the fourth quarter that ended December 31, 2022, up 41.4% year-over-year. Its total operating expenses decreased 2.1% year-over-year to $23.49 million. Also, its current liabilities came in at $29.97 million for the period ended December 31, 2022, compared to $34.02 million for December 31, 2022.
Analysts expect CDTX’s revenue to increase 849.5% year-over-year to $67.50 million for the quarter ending March 2023. Its EPS is expected to increase by 181.5% year-over-year to $0.22 for the same quarter. It surpassed EPS estimates in all four trailing quarters. Over the past nine months, the stock has gained 157.7% to close the last trading session at $1.43.
CDTX has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Growth and a B for Value, Sentiment, and Quality. It is ranked #15 in the same industry. Get the additional POWR Ratings for CDTX here (Momentum and Stability).
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VRTX shares were trading at $312.89 per share on Friday afternoon, up $8.14 (+2.67%). Year-to-date, VRTX has gained 8.35%, versus a 3.11% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
4 Biotech Stocks You Don’t Want to Miss out on in 2023 StockNews.com
