The biotech industry has undergone a remarkable transformation, evolving through significant breakthroughs. From humble beginnings, it has become a hub of innovation, shaping the future of healthcare with cutting-edge solutions, robust research, and pivotal government support.
Therefore, fundamentally sound biotech stocks, ANI Pharmaceuticals, Inc. (ANIP), Equillium, Inc. (EQ), and Exelixis, Inc. (EXEL), could make ideal additions to your portfolio. Before exploring the highlighted stocks, let's analyze the factors propelling the industry's growth.
Personalized medicine and increased availability of orphan drug formulations are driving growth in the biotech sector. The FDA's CDER approved 55 innovative molecular entities and therapeutic biological products last year, showcasing the industry's strong commitment to research and development.
Harnessing state-of-the-art technology, revolutionary biotech tools such as brain mapping, autonomous therapeutic systems, cellular anti-aging research, gene editing, living medicines, lab-grown organs, epigenetics, digital therapeutics, and sophisticated wearables are also catalyzing substantial growth within the industry.
Moreover, the industry is enjoying substantial government backing, exemplified by the 2023 budget assigning $5 billion to the Advanced Research Projects Agency for Health (ARPA-H).
The funding is designed to accelerate biomedical innovations spanning molecular to societal realms, promising groundbreaking solutions for patients and reinforcing the sector's pivotal role in healthcare advancement.
As per a Grand View Research report, the global biotechnology market is anticipated to achieve $1.76 trillion in 2024 and is projected to escalate further to $3.88 trillion by 2030, showcasing a CAGR of 14%. In light of these encouraging trends, let’s look at the fundamentals of the three best Biotech stocks, beginning with number 3.
Stock #3: ANI Pharmaceuticals, Inc. (ANIP)
ANIP develops, manufactures, and markets both branded and generic prescription pharmaceuticals. It specializes in controlled substances, oncology products, hormones, steroids, injectables, and various formulations, such as extended-release and combination products.
On January 23, ANIP unveiled the launch of Pentoxifylline Extended-Release (ER) Tablets, the generic counterpart to the Reference Listed Drug (RLD) Trental®. Valued at around $19.7 million annually as per IQVIA/IMS Health estimates, the launch positions ANIP to sustain its generics business success in a moderately competitive market.
For the fiscal 2023 third quarter that ended September 30, 2023, ANIP’s net revenues increased 57.3% year-over-year to $131.83 million. Its adjusted EBITDA grew 98.3% from the year-ago value to $36.48 million.
Additionally, adjusted net income available to common shareholders and adjusted earnings per share grew 155.3% and 119% from the prior year’s period to $24.27 million and $1.27, respectively.
The company's robust execution has yielded another record quarter in revenue and adjusted EBITDA, prompting a third consecutive upward revision in full-year 2023 guidance. ANIP estimates fiscal 2023 net revenue between $468 million and $478 million, up from the previous guidance of $425 million to $445 million.
Additionally, adjusted EBITDA is expected to range between $128 million and $133 million, an increase from the prior estimate of $115 million to $125 million. Furthermore, adjusted EPS is projected to be $4.29 to $4.57, surpassing the previous guidance of $3.62 to $4.11.
The consensus revenue estimate of $476.56 million for the fiscal year that ended December 2023 indicates a 50.6% year-over-year rise. Likewise, the consensus EPS estimate of $4.46 for the same period is estimated to grow 227.9% from the prior year. Moreover, the company topped the consensus revenue and EPS estimates in all four trailing quarters.
Shares of ANIP have gained 28.7% over the past year, closing the last trading session at $55.02.
ANIP’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.
ANIP has an A grade for Growth and Sentiment and a B for Value. It is ranked #30 out of 637 stocks within the Biotech industry.
In addition to the POWR Ratings I’ve highlighted, you can see ANIP’s Momentum, Stability, and Quality ratings here.
Stock #2: Equillium, Inc. (EQ)
EQ develops and markets solutions for severe autoimmune and immuno-inflammatory disorders. Its flagship product, itolizumab (EQ001), a clinical-stage monoclonal antibody, targets the innovative immune checkpoint receptor CD6. The company also pioneers EQ101 for cutaneous T cell lymphoma and alopecia areata and EQ102 for diverse gastrointestinal diseases.
On December 21, 2023, EQ provided a progress update on its multi-cytokine programs. Notably, EQ101, designed for alopecia areata, completed enrollment for its Phase 2 study. The ongoing research indicates favorable tolerability of EQ101 over the 24-week dosing period. With top-line data expected in the second quarter of 2024, these developments position EQ for further success in addressing medical challenges.
For the fiscal 2023 third quarter that ended September 30, 2023, EQ’s total revenue stood at $8.87 million. As of September 30, 2023, the company’s cash and cash equivalents stood at $34.38 million. Moreover, its total assets amounted to $55.23 million.
Analysts expect EQ’s revenue to increase 31.5% year-over-year to $43.14 million for the fiscal year ending December 2024. The company’s EPS for the same year is expected to come in at $0.37. Also, the company surpassed the consensus revenue estimates in all of the trailing four quarters.
The stock has gained 19% over the past month, closing the last trading session at $0.87.
EQ’s robust outlook is apparent in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.
EQ has a B grade for Growth, Value, Sentiment, and Quality. It is ranked #23 out of 637 stocks within the Biotech industry.
Click here to access additional EQ ratings for Momentum and Stability.
Stock #1: Exelixis, Inc. (EXEL)
EXEL discovers, develops, and commercializes novel cancer treatments. It provides CABOMETYX tablets, addressing advanced renal cell carcinoma post-anti-angiogenic therapy, and COMETRIQ capsules, targeting progressive and metastatic medullary thyroid cancer.
On January 22, EXEL and Bristol Myers Squibb (BMY) announced significant four-year follow-up results from the CheckMate -9ER trial, showcasing the sustained superiority of Opdivo® (nivolumab) combined with CABOMETYX® (cabozantinib) over sunitinib in treating advanced or metastatic renal cell carcinoma (RCC).
The positive outcomes underscore the potential for an expanded market presence, reinforcing EXEL's position as a leading provider of effective and innovative cancer treatments. The 23% reduction in the risk of death further strengthens EXEL's portfolio and solidifies its pivotal role in improving patient outcomes for this challenging disease.
For the fiscal 2023 third quarter that ended on September 29, 2023, EXEL’s net product revenues increased 16.4% year-over-year to $426.50 million. Its total revenues grew 14.6% from the year-ago value to $471.92 million. Additionally, the company’s net income came in at $1.04 million.
The consensus revenue estimate of $1.83 billion for the fiscal year that ended December 2023 indicates a 13.5% year-over-year rise. Likewise, the consensus EPS estimate of $0.61 for the same period is estimated to grow 8.3% from the prior year. Shares of EXEL have gained 25.9% over the past year, closing the last trading session at $21.89.
EXEL’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.
EXEL has an A grade for Value and Quality and a B for Growth. It is ranked #3 within the same industry.
Click here to access the additional EXEL ratings (Momentum, Stability, and Sentiment).
What To Do Next?
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EXEL shares were trading at $21.87 per share on Tuesday afternoon, down $0.02 (-0.09%). Year-to-date, EXEL has declined -8.84%, versus a 3.32% 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.
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