The biotech industry is fueled by biopharmaceutical companies' growing adoption of advanced technologies and a growing focus on developing personalized medicines. Given the industry’s steady growth prospects, investors could consider quality biotech stocks Halozyme Therapeutics, Inc. (HALO), BioMarin Pharmaceutical Inc. (BMRN), and United Therapeutics Corporation (UTHR).
The expansion of healthcare infrastructure in emerging countries is accompanied by rapid growth of healthcare facilities and modernization. This aspect contributes to diagnostic laboratories’ increasing demand for clinical diagnostic procedures, leading to higher sales and revenue growth of biotechnologies in the market.
The global biotechnology market is expected to grow at a CAGR of 12.8% until 2030.
Additionally, the growing adoption of AI technology has reduced the cost of the drug delivery process. Therefore, AI solutions have emerged as a tool for pharmaceutical organizations to enhance their capabilities in the industry.
Artificial intelligence in the biotechnology market is anticipated to grow at a CAGR of 29.7% until 2032.
Moreover, the growth of the personalized medicine market is attributed to factors such as the growing demand for novel drug discovery to combat the growing incidence of cancers and other diseases across the globe.
The global personalized medicine market is projected to grow at a CAGR of 7.2% until 2030.
With these favorable trends in mind, let’s delve into the fundamentals of the three best Biotech stocks, beginning with the third choice.
Stock #3: Halozyme Therapeutics, Inc. (HALO)
HALO is a biopharma technology platform company that researches, develops, and commercializes proprietary enzymes and devices in the United States, Switzerland, Ireland, Belgium, Japan, and internationally.
On August 29, 2023, HALO announced the approval of Roche’s Tecentriq SC (atezolizumab), using Halozyme’s ENHANZE drug delivery technology, by the Medicines and Healthcare Products Regulatory Agency (MHRA) in Great Britain. Tecentriq subcutaneous (SC) is co-formulated with Halozyme’s proprietary recombinant human hyaluronidase enzyme, rHuPH20, allowing for subcutaneous delivery, which takes approximately seven minutes, compared with 30-60 minutes for intravenous (IV) infusion.
HALO’s trailing-12-month EBIT margin of 42.39% is significantly higher than the industry average of 0.53%. Its trailing-12-month EBITDA margin of 51.78% is 883.5% higher than the industry average of 5.26%.
For the second quarter that ended June 30, 2023, HALO’s total revenues increased 45.1% year-over-year to $221.04 million. Its non-GAAP net income increased 30% year-over-year to $98.44 million. Its non-GAAP EPS increased 250% year-over-year to $0.56.
The company’s revenue for the fiscal third quarter ending September 2023 is expected to increase 8.6% year-over-year to $226.83 million. Its EPS is expected to increase marginally year-over-year to $0.75 for the same quarter. Moreover, the company has surpassed the consensus EPS estimates in three of the trailing four quarters.
Over the past three months, the stock has gained 13.8%, closing the last trading session at $38.27.
HALO’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
HALO has a B grade for Value and Sentiment. It is ranked #25 in the 356-stock Biotech industry.
Click here to access the additional HALO ratings (Growth, Momentum, Quality, and Stability).
Stock #2: BioMarin Pharmaceutical Inc. (BMRN)
BMRN develops and commercializes therapies for people with severe and life-threatening rare diseases and medical conditions. The company’s commercial products include Vimizim, Naglazyme, Kuvan, Palynziq, Brineura, Roctavian and Voxzogo.
On September 15, BMRN announced that the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion recommending marketing authorization to expand the indication for VOXZOGO (vosoritide) for injection to treat children aged four months and older with achondroplasia.
BMRN’s trailing-12-month EBIT margin of 4.15% is 680.5% higher than the industry average of 0.53%. Its trailing-12-month levered EBITDA margin of 8.68% is 64.9% higher than the industry average of 5.26%.
For the second quarter that ended June 30, 2023, BMRN’s revenues increased 11.5% year-over-year to $595.27 million. Its income from operations grew 50.4% from the year-ago value to $58.87 million. The company’s non-GAAP net income rose 37% from the prior year’s quarter to $105.20 million, and its non-GAAP EPS was $0.54, up 31.7% year-over-year.
Analysts expect BMRN’s EPS for the fiscal year (ending December 2023) to increase 13.9% year-over-year to $2.20. The consensus revenue estimate of $2.46 billion for the current year indicates a 17.2% rise year-over-year. Moreover, the company has surpassed the consensus EPS estimates in three of the trailing four quarters.
Over the past three months, the stock has gained marginally, closing the last trading session at $85.90.
BRMN’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to Buy in our proprietary rating system.
It has an A grade for Growth and a B in Value. Within the same industry, it is ranked #20.
Beyond what is stated above, we’ve also rated BMRN for Momentum, Stability, Quality, and Sentiment. Get all BMRN ratings here.
Stock #1: United Therapeutics Corporation (UTHR)
UTHR is a biotechnology company that engages in the development and commercialization of products to address the unmet medical needs of patients with chronic and life-threatening diseases in the United States and internationally.
UTHR’s trailing-12-month gross profit margin of 89.94% is 61.6% higher than the industry average of 55.67%. Its trailing-12-month levered FCF margin of 24.14 is significantly higher than the industry average of 0.25%.
During the second quarter that ended June 30, 2023, UTHR’s total revenues rose 28% year-over-year to $596.50 billion. The company’s net income grew 123% year-over-year to $259.20 million. Also, the company’s net income per share rose 117% from the year-ago quarter to $5.24.
Street expects UTHR’s revenue for the fiscal quarter ending September 2023 to grow 13.6% year-over-year to $586.09 million. Its EPS is expected to increase 14.6% year-over-year to $5.59 in the same quarter. In addition, the company has topped the consensus EPS estimates in three of the trailing four quarters.
Shares of UTHR have gained 3.7% over the past year to close the last trading session at $221.93.
It’s no surprise that UTHR has an overall rating of B, which equates to Buy in our proprietary rating system.
UTHR has a B grade for Value, Sentiment, and Quality. It is ranked #13 in the same industry.
In addition to the POWR Ratings highlighted above, one can access UTHR’s ratings for Stability, Momentum, and Growth here.
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BMRN shares were trading at $86.42 per share on Thursday afternoon, up $0.52 (+0.61%). Year-to-date, BMRN has declined -16.49%, versus a 11.73% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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