The biotechnology industry is flourishing due to accelerated progress in drug formulation, technological advancements, and solid governmental backing. Given the promising industry dynamics, investors might want to direct their attention to fundamentally sound biotech stocks BioNTech SE (BNTX), Puma Biotechnology, Inc. (PBYI), and Protalix BioTherapeutics, Inc. (PLX) for solid investment opportunities this month.
The biotechnology industry holds vast potential to unlock innumerable opportunities to enrich society. Evidencing an expansive array of lucrative applications, the industry is positioned for persistent growth.
One pivotal domain where biotech is primed to effect considerable transformation is healthcare. Healthcare professionals forecast that this rapidly growing industry will be crucial in groundbreaking developments in precision medicine, gene therapies, formulation of orphan drugs, and regenerative medicines.
The U.S. Food and Drug Administration's (FDA) Center for Drug Evaluation and Research (CDER) has stamped its approval on 38 new molecular entities and noteworthy therapeutic biological products so far this year, reflecting potent research momentum in the biotech sector.
Recognizing its essential role, government initiatives and investments have been critical in enhancing research and development endeavors in the biotech industry. The proposed Budget for 2023 sets aside $5 billion for the Advanced Research Projects Agency for Health (ARPA-H), which aims to catalyze biomedical innovations, spanning molecular to societal dimensions, promising to deliver radical solutions for patients.
Investments like these streamline the regulatory pathway for medical products and standardize clinical study processes, accelerating the approval process for new vaccines and treatments.
Simultaneously, the integration of Generative AI into biotechnology is paving the way for accelerated drug discovery, efficient disease diagnosis, customization of medication, and structural alterations in gene editing. These advancements hold robust potential for strengthening the biotechnological landscape in the future.
The global biotechnology market is expected to grow at a CAGR of 14% to reach $3.88 trillion by 2030.
In light of these encouraging trends, let's look at the fundamentals of three Biotech stock picks, beginning with number 3.
Stock #3: BioNTech SE (BNTX)
Headquartered in Mainz, Germany, BNTX is a biotechnology company that develops and commercializes immunotherapies for cancer and other infectious diseases.
On September 28, BNTX and Pfizer Canada ULC announced that Health Canada has authorized the companies' Omicron XBB.1.5-adapted monovalent COVID-19 vaccine (COMIRNATY Omicron XBB.1.5) for ages six months and older. Availability of the revised vaccine in Canada is expected in the coming weeks, a development that stands to benefit BNTX positively.
On September 18, BNTX partnered with Coalition for Epidemic Preparedness Innovations (CEPI) to fast-track mRNA-based vaccine candidates with the development of BNT166 for the prevention of mpox (an infectious disease formerly known as monkeypox and caused by a member of the Orthopoxvirus viral family). This condition can lead to severe, life-threatening complications.
BNTX’s trailing-12-month EBIT and levered FCF margins of 63.94% and 91.59% are significantly higher than the industry averages of 0.53% and 0.25%, respectively. Also, its trailing-12-month EBITDA of 64.67% is significantly higher than the industry average of 5.26%.
Over the past three years, its revenue and tangible book value grew at CAGRs of 317.7% and 259.2%, respectively. Also, its total assets grew at a CAGR of 183.7% over the same period.
For the fiscal second quarter that ended June 30, 2023, BNTX’s revenue stood at €167.70 million ($175.58 million). Its cash and cash equivalents for the quarter end stood at €14.17 billion ($14.83 billion), up 51.8% year-over-year.
As of June 30, 2023, BNTX’s total current liabilities stood at €1.82 billion ($1.90 billion), compared to €2.95 billion ($3.09 billion) as of December 31, 2022.
Street expects BNTX’s revenue and EPS in the fiscal third quarter ending September 2023 to come at $1.38 billion and $1.12, respectively. The company surpassed consensus revenue and EPS estimates in three of the trailing four quarters, which is impressive.
The stock has gained 1.4% over the past three months to close the last trading session at $109.33. Over the past five days, it gained 5.9%.
BNTX’s POWR Ratings reflect its positive prospects. The stock has an overall B rating, equating 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 Value and a B for Sentiment and Quality. In the Biotech industry, it is ranked #24 out of the 356 stocks.
To see additional POWR Ratings for Growth, Momentum, and Stability for BNTX, click here.
Stock #2: Puma Biotechnology, Inc. (PBYI)
PBYI is a biopharmaceutical company focused on developing and commercializing products to enhance cancer care in the United States and internationally.
On September 21, PBYI received the U.S. FDA Orphan Drug Designation for alisertib, a selective, small-molecule, orally administered inhibitor of aurora kinase A, for treating patients with small cell lung cancer (SCLC). This signifies the company’s continued progress and commitment to the development of alisertib.
PBYI’s trailing-12-month EBIT and levered FCF margins of 12.46% and 5.09% are significantly higher than the industry averages of 0.53% and 0.25%, respectively. Its trailing-12-month asset turnover ratio of 1.17x is 209.1% higher than the industry average of 0.38x.
Over the past three years, PBYI’s levered free cash flow grew at a CAGR of 32.5%, while its revenue grew at a CAGR of 9.7% over the past five years.
For the fiscal second quarter that ended June 30, 2023, PBYI’s total revenue and income from operations stood at $54.57 million and $4.89 million, respectively. The company’s non-GAAP adjusted net income and non-GAAP adjusted net income per share stood at $4.56 million and $0.10, respectively.
For the six months that ended June 30, 2023, the company’s net cash provided by operating activities stood at $5.94 million, compared to net cash used in operating activities of $40.77 million. As of June 30, 2023, PBYI’s total current liabilities stood at $60.29 million, compared to $77.48 million as of December 31, 2022.
PBYI’s revenue, in the fiscal third quarter ending September 2023, is expected to increase 1.5% year-over-year to $57.95 million. Its EPS is expected to come at $0.08. The company surpassed consensus revenue estimates in each of the trailing four quarters and EPS in three of the trailing four quarters.
The stock has gained 4.2% over the past year to close the last trading session at $2.49.
PBYI’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to Buy in our proprietary rating system.
PBYI has an A grade for Value. Within the Biotech industry, it is ranked #21.
Beyond what we’ve stated above, we have also rated the stock for Growth, Momentum, Stability, Sentiment, and Quality. Get all ratings of PBYI here.
Stock #1: Protalix BioTherapeutics, Inc. (PLX)
PLX is a biopharmaceutical company focused on developing and commercializing recombinant therapeutic proteins expressed through its proprietary plant cell-based expression system, ProCellEx.
On May 18, PLX revealed its eligibility to receive a $20 million milestone payment from Chiesi Global Rare Diseases, a division of the Chiesi Group, following the U.S. FDA approval of ELFABRIO for treating adult patients suffering from Fabry disease. This development represents a pivotal progression for PLX, bolstering its fiscal stability.
PLX’s trailing-12-month asset turnover ratio of 0.91x is 139.6% higher than the industry average of 0.38x. Its trailing-12-month EBIT margin of 18.29% is significantly higher than the industry average of 0.53%.
PLX’s revenue grew at CAGRs 1.5% and 23.6% over the past three and five years, respectively. Its total assets grew at CAGRs of 7.2% and 11.3% over the same periods.
For the fiscal second quarter that ended June 30, 2023, PLX’s total revenue stood at $35.08 million, up 300.7% year-over-year. Its operating income came in at $20.42 million, compared to an operating loss of $5.52 million in the year-ago quarter.
The company’s net income for the period and earnings per share of common stock came in at $19.34 million and $0.21, compared to a net loss for the period and loss per share of common stock of $5.33 million and $0.11 in the year-ago quarter, respectively.
Street expects PLX’s revenue in the fiscal year ending December 2023 to increase 27.3% year-over-year to $60.66 million. Its EPS is expected to come at $0.10. The company surpassed consensus revenue and EPS estimates in each of the trailing four quarters.
The stock has gained 3.9% intraday to close the last trading session at $1.62. Over the past year, it gained 54.3%.
PLX’s robust prospects are reflected in its POWR Ratings. The stock has an overall B rating, equating to Buy in our proprietary rating system.
PLX has an A grade for Value and a B for Growth and Quality. It is ranked #17 within the same industry.
Click here for the additional POWR Ratings for PLX (Momentum, Stability, and Sentiment).
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
BNTX shares were trading at $109.11 per share on Wednesday morning, down $0.22 (-0.20%). Year-to-date, BNTX has declined -27.37%, versus a 11.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
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