Biotechnology companies have made stellar gains since the onset of the COVID-19 pandemic with an intense focus on developing vaccines and drugs. Governments worldwide made lofty investments to mitigate the public health crisis through mass vaccinations.
The rapid tech integration and substantial private and public investments have allowed major biotech companies to expand their product portfolio tremendously. Moreover, developments of new ways of treating and preventing major life-threatening diseases have helped the industry grow.
According to Precedence Research, the global biotechnology market is expected to surpass $1.68 trillion by 2030, growing at a CAGR of 8.7%. While the industry has witnessed a slowdown this year due to the broader market correction, it is poised to see another bull run, given the successful trial results and FDA approvals for vaccines and treatments for deadly diseases and rising demand from an aging population.
Investors’ interest in the industry is evident from the 20.4% returns of the SPDR S&P Biotech ETF (XBI) over the past month. This compares to the SPDR S&P 500 Trust ETF’s (SPY) 1.4% decline.
Given the industry’s solid growth prospects, Pfizer Inc. (PFE), Bristol-Myers Squibb Company (BMY), and Eli Lilly and Company (LLY) are well-positioned to perform better than their peers. So, these stocks could be ideal investments now.
Pfizer Inc. (PFE)
PFE specializes in biopharmaceutical products globally. Its portfolio includes medicines and vaccines served to wholesalers, retailers, healthcare providers, government agencies, pharmacies, and local communities.
On July 8, 2022, PFE and BioNTech SE (BNTX) announced the FDA approval of their COVID-19 vaccine, COMIRNATY. It is now the only approved COVID-19 vaccine as a two-dose primary series for adolescents (12-15 years of age).
On June 9, PFE acquired ReViral. This acquisition strengthens the company’s capabilities in treating RSV disease and expands its anti-infective pipeline further.
PFE’s revenue increased 77% year-over-year to $25.66 billion in the fiscal first quarter (ended March 31). Its non-GAAP net income grew 74.5% from the year-ago value to $9.34 billion, while its income from continuing operations improved 61% year-over-year to $7.88 billion over the period. The company’s non-GAAP EPS increased 70.5% from the year-ago value to $1.62.
The consensus EPS estimate of $1.79 for its fiscal second quarter (ended June 2022) represents a 67.7% improvement year-over-year. The consensus revenue estimate of $26.12 billion for the to-be-reported quarter indicates a 37.6% increase from the same period last year. The company has an excellent earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past year, the stock has gained 33.5% to close its last trading day at $52.89.
PFE’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has a B grade for Growth, Value, and Quality. Among the 171 stocks in the Medical – Pharmaceuticals industry, it is ranked #3. Click here to see the additional POWR ratings of PFE for Momentum, Stability, and Sentiment.
Bristol-Myers Squibb Company (BMY)
BMY is a biopharmaceutical company offering pharmaceutical products for treating hematology, oncology, cardiovascular, immunology, fibrotic, neuroscience, and Covid-19 diseases.
On June 24, 2022, the company received FDA’s approval for CAR T cell therapy Breyanzi for relapsed or refractory large B-cell lymphoma after one prior treatment. With this approval, Breyanzi diversified BMY’s cell therapy portfolio and reinforces its leadership in delivering innovative cancer treatments.
On the same day, BMY announced that individuals with relapsing forms of multiple sclerosis treated with Zeposia (ozanimod) developed an immune response to COVID-19 vaccines. This observation might help physicians to seek to optimize care for patients in the face of ongoing COVID-19 pandemic challenges.
For the first quarter ended March 31, 2022, BMY’s total revenues increased 5% year-over-year to $11.64 billion. Its non-GAAP gross profit grew 6.7% year-over-year to $9.23 billion, while its non-GAAP net earnings attributable to BMS rose 7.1% from the year-ago-value to $4.25 billion. The company’s non-GAAP EPS increased 12.6% from its prior-year quarter to $1.96.
Analysts expect BMY’s EPS and revenue to increase marginally year-over-year to $7.54 and $46.39 billion in the current year ending December 31, 2022. BMY surpassed the consensus EPS estimates in each of the trailing four quarters.
The shares of BMY have gained 31.6% over the past nine months to close the last trading day at $75.56.
BMY’s POWR Ratings reflect solid prospects. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
It also has an A grade for Value and a B grade for Growth and Quality. Within the same industry, it is ranked #5. To see additional POWR Ratings of BMY for Momentum, Stability, and Sentiment, click here.
Eli Lilly and Company (LLY)
LLY is a drug manufacturing company. Its offerings include Basaglar, Humalog, Humulin, Jardiance, Trajenta, Erbitux, Retevmo, Tyvyt, Emgality, and Reyvow, among various others. The company distributes its products in the U.S. and eight other countries.
On June 29, 2022, LLY announced the agreement to supply an additional 150,000 doses of bebtelovimab for approximately $275 million to the U.S. government in an ongoing effort to provide COVID-19 treatment options. Bebtelovimab continues to maintain neutralization against all known variants of interest and concern.
On June 13, FDA approved LLY’s and Incyte Corporation's (INCY) OLUMIANT® (baricitinib), a once-daily pill, as a first-in-disease systemic treatment for adults with severe alopecia areata. The approval was based on the remarkable results of adults who took OLUMIANT 4-mg and saw at least 80% scalp hair coverage and eyebrow and eyelash improvements at 36 weeks in the BRAVE-AA1 and BRAVE-AA2 trials.
In the first quarter ended March 31, 2022, LLY’s revenue increased 15% year-over-year to $7.81 billion. Its non-GAAP net income increased 62% from the year-ago value to $2.37 billion, while its non-GAAP EPS came in at $2.62, representing a 63% year-over-year improvement.
For the year ending December 31, 2022, LLY’s EPS and revenue are expected to increase 2.2% and 2.4% year-over-year to $8.34 and $29.01 billion, respectively. LLY has gained 41.6% over the past nine months to close the last trading session at $331.07.
The company’s strong fundamentals are reflected in its POWR Ratings. LLY has an overall rating of A, equating to a Strong Buy in our proprietary rating system. It has a B grade for Growth, Stability, Sentiment, and Quality. Again, in the same industry, it is ranked #13.
Beyond what we’ve stated above, we have also given LLY grades for Value and Momentum. Get all the LLY ratings here.
PFE shares fell $0.31 (-0.59%) in premarket trading Tuesday. Year-to-date, PFE has declined -9.01%, versus a -18.50% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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