The biotech industry is thriving due to consistent innovations and the sustained demand for cutting-edge healthcare solutions. Additionally, the industry benefits from a fast-aging demographic and an expanding need for high-quality treatments for both rare and common diseases, which contribute to its positive outlook.
Therefore, it could be wise to consider adding fundamentally strong biotech stocks Acorda Therapeutics, Inc. (ACOR), BioNTech SE (BNTX), and Jazz Pharmaceuticals plc (JAZZ) to one's watchlist.
Before delving deeper into their fundamentals, let’s discuss why the biotech industry is well-positioned for growth.
The biotech industry's growth is driven by notable progress in drug development, elevated investments in research and development (R&D), and clinical trials. A survey by ICON plc, involving more than 130 biotech executives, showed that 60% of respondents expected a rise in R&D spending, while only 2% expected a reduction in funding.
The industry’s long-term growth will be driven by an increase in clinical trials, expansion of the drug pipelines, and higher investments in pharmaceutical R&D. The clinical trial market is forecasted to reach $120.97 billion in 2024 and is expected to grow at a CAGR of 4.3% to reach $184.61 billion by 2034.
Additionally, the rising demand for personalized medicine and the development of more orphan drug formulations to address the increasing occurrence of chronic and rare diseases are creating fresh opportunities for biotechnology applications and is also fueling the emergence of innovative biotech companies.
Biotech firms are harnessing advanced technologies such as AI and Big Data analytics to propel innovation. AI is rapidly advancing in the identification of drug targets, especially in anticancer initiatives. The global AI for Pharma and Biotech market, valued at $850 million in 2024, is forecasted to reach $4.20 billion by 2027, growing at a 30.5% CAGR.
Investors’ interest in biotech stocks is evident from the VanEck Vectors Biotech ETF’s (BBH) 10.8% returns over the past three months. Furthermore, the global biotechnology market is anticipated to expand at a CAGR of 11.8% to reach $4.25 trillion by 2033.
Considering these conducive trends, let’s analyze the fundamental aspects of the three Biotech picks, beginning with the third choice.
Stock #3: Acorda Therapeutics, Inc. (ACOR)
ACOR is a biopharmaceutical company that develops and commercializes therapies for neurological disorders. The company markets Ampyra, an oral drug designed to improve walking in adults with multiple sclerosis, and Inbrija.
On January 11, 2024, ACOR announced its intention to regain global commercialization rights to FAMPYRA by January 2025. Additionally, ACOR plans to assume commercialization responsibilities in 2024.
In terms of trailing-12-month EV/Sales, ACOR’s 1.53x is 62.2% lower than the 4.05x industry average. Its 14.80x trailing-12-month EV/EBITDA is 4.8% lower than the 15.55x industry average. Also, its 0.15x trailing-12-month Price/Sales is 96.2% lower than the 4.05x industry average.
ACOR's total revenues for the third quarter ended September 30, 2023, amounted to $27.72 million. Its net loss and net loss per common share narrowed 35.8% and 35.9% year-over-year to $8.89 million and $7.16 per share, respectively. Also, the company’s royalty revenues came in at $2.50 million.
In addition, for the same quarter, its U.S. net revenue from INBRIJA increased 4% year-over-year to $8.10 million, while its net revenue from AMPYRA stood at $15.70 million.
Over the past three months, ACOR’s stock has gained 38.7% to close the last trading session at $14.49.
ACOR’s POWR Ratings reflect solid prospects. It has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is ranked #21 out of 345 stocks in the Biotech industry. It has an A grade for Growth and a B for Value. Click here to see ACOR’s Momentum, Stability, Sentiment, and Quality ratings.
Stock #2: BioNTech SE (BNTX)
Based in Mainz, Germany, BNTX is a biotechnology company that develops and commercializes immunotherapies for cancer and other infectious diseases. The company is developing FixVac product candidates, including BNT111, BNT112, BNT113, BNT115, and BNT116.
On February 8, 2024, BNTX and Autolus announced a strategic collaboration to advance their autologous CAR-T programs toward the market, with BNTX securing rights to utilize Autolus' manufacturing capacity for BNT211 and investing $200 million in Autolus.
In terms of forward EV/Sales, BNTX’s 1.23x is 67.5% lower than the 3.79x industry average. Its 5.82x forward EV/EBIT is 65.2% lower than the 16.70x industry average. Also, its 0.99x forward Price/Book is 65.9% lower than the 2.92x industry average.
For the fiscal third quarter that ended September 30, 2023, BNTX’s total revenues stood at €895.30 million ($971.36 million). Its operating income came in at €73.10 million ($79.31 million). The company’s profit for the period and earnings for the period per share stood at €160.60 million ($174.24 million) and €0.67, respectively.
Moreover, its cash and cash equivalents for the quarter increased marginally year-over-year to €13.50 billion ($14.65 billion).
Street expects BNTX’s revenue for the quarter ending June 30, 2024, to increase 23.6% year-over-year to $228.15 million. Over the past month, the stock has declined 2.1% to close the last trading session at $92.79.
BNTX’s positive outlook is reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system.
It has an A grade for Value and a B for Sentiment and Quality. It is ranked #15 in the same industry. To see BNTX’s ratings for Growth, Momentum, and Stability, click here.
Stock #1: Jazz Pharmaceuticals plc (JAZZ)
JAZZ identifies, develops, and commercializes pharmaceutical products for unmet medical needs in the United States, Europe, and internationally. The company has a portfolio of products and product candidates focusing on neuroscience, including sleep medicine and movement disorders, and oncology, such as hematologic and solid tumors.
On February 7, 2024, JAZZ announced its definitive agreement with Redx Pharma to acquire global rights to the KRAS Inhibitor Program, with Redx receiving $10 million upfront and potential milestone payments of up to $870 million, expanding JAZZ’s pipeline of targeted oncology therapies.
In terms of forward non-GAAP P/E, JAZZ's 7.16x is 63.6% lower than the 19.67x industry average. Its 7.20x forward EV/EBITDA is 45.9% lower than the 13.33x industry average. Likewise, its 7.45x forward EV/EBIT is 55.4% lower than the 16.70x industry average.
For the third quarter ended September 30, 2023, JAZZ's total revenue increased 3.3% year-over-year to $972.14 million. The company's income from operations rose 596.2% over the prior-year quarter to $172.39 million. Its adjusted net income and adjusted EPS stood at $340.15 million and $4.84, respectively.
In addition, as of September 30, 2023, its total assets stood at $11.20 billion compared to total assets as of December 31, 2022, of $10.83 billion.
Analysts expect JAZZ’s revenue for the quarter ended December 31, 2023, to increase 3.4% year-over-year to $1.01 billion. Its EPS for the quarter ending March 31, 2024, is expected to increase 10.8% year-over-year to $4.38. Over the past three months, the stock has gained 12.5% to close the last trading session at $132.26.
It’s no surprise that JAZZ has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has an A grade for Value and a B for Growth, Sentiment, and Quality. Within the Biotech industry, it is ranked #2. Beyond what we stated above, we also have given JAZZ grades for Momentum and Stability. Get all JAZZ ratings here.
What To Do Next?
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BNTX shares were trading at $91.93 per share on Wednesday afternoon, down $0.86 (-0.93%). Year-to-date, BNTX has declined -12.90%, versus a 6.45% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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