An increase in demand for genetic testing services, coupled with a greater emphasis on preventive healthcare, has positioned consumer genomics as a transformative sector in the healthcare landscape.
Given this backdrop, it could be wise to consider investing in fundamentally strong genomics stocks, Bio-Techne Corporation (TECH), Illumina, Inc. (ILMN), and Exelixis, Inc. (EXEL) which are unlocking the future of medicine.
The growing demand in the genomics market is driven by a deeper understanding of evolution and the need to preserve the biological ecosystem, which contributes to the development of new diagnostics, treatments, and vaccines. Therefore, the global genomics market is anticipated to grow at a CAGR of 16.5% by 2034.
Additionally, the concept of personalized medicine, tailored to an individual's genetic makeup, is gaining traction in the biotechnology market. Advancements in genomic sequencing technologies have made it possible to analyze an individual's genetic code and identify genetic variations linked to diseases.
Given these favorable industry trends, let’s look at the fundamentals of three Biotech stocks, beginning with the third choice.
Stock #3: Bio-Techne Corporation (TECH)
TECH develops, manufactures, and sells life science reagents, instruments, and services for the worldwide research, diagnostics, and bioprocessing markets. The company operates through two segments: Protein Sciences and Diagnostics and Genomics.
On January 10, 2025, TECH announced the launch of new designer proteins engineered using advanced Artificial Intelligence (AI) based design platforms and protein evolutionary workflows.
This expanded portfolio from TECH's R&D Systems brand includes IL-2 Heat Stable Agonist, Activin A Hyperactive, FGF basic Heat Stable (available both for research use only (RUO) and made under good manufacturing processes (GMP) for therapeutic development), as well as Wnt/RSPO1 Agonist, Wnt/RSPO2 Agonist, and Wnt/RSPO3 Agonist proteins.
TECH’s trailing-12-month gross profit margin of 65.68% is 12.9% higher than the respective industry average of 58.20%. Its trailing-12-month EBIT margin of 19.97% is significantly higher than the industry average of 2.57%.
During the second quarter that ended on December 31, 2024, TECH’s net sales increased 9% year-over-year to $297.03 million. Its operating income grew 6.9% from the year-ago value to $47.42 million. The company’s non-GAAP net earnings of $68.13 million indicate growth of 290.1% from the prior year’s quarter. In addition, the company’s adjusted EPS was $0.42, up 5% year over year.
TECH’s shares have gained 2% over the past month to close the last trading session at $75.25.
TECH’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Growth and Quality. Within the Biotech industry, TECH is ranked #37 out of 336 stocks.
Click here to access additional TECH ratings for Value, Momentum, Stability, and Sentiment.
Stock #2: Illumina, Inc. (ILMN)
ILMN engages in sequencing- and array-based solutions for genetic and genomic analysis internationally. It operates through two segments: Core Illumina and GRAIL. It provides sequencing and array-based instruments and consumables, whole-genome sequencing kits, genotyping, NIPT, and product support services.
On January 13, ILMN announced a collaboration with NVIDIA Corporation (NVDA) to advance technology platforms for analyzing and interpreting multiomic data, accelerating progress in clinical research, genomics AI development, and drug discovery.
This collaboration combines ILMN’s sequencing technologies and Illumina Connected Software with NVIDIA tools to develop biological foundation models and deliver total workflow solutions for customers.
ILMN’s trailing-12-month gross profit margin of 67.61% is 16.2% higher than the respective industry average of 58.20%. Its trailing-12-month EBIT margin of 7.70% is 199.3% higher than the industry average of 2.57%.
In the fiscal third quarter, which ended on September 29, 2024, ILMN’s total revenue amounted to $1.08 billion. Its gross profit rose 8.9% from the year-ago value to $745 million. Moreover, its income from operations came in at $741 million compared to a year-ago net loss of $754 million.
The company’s net income stood at $705 million compared to the prior-year quarter’s loss of $754 million, while its EPS came in at $4.42 versus a loss of $4.77 per share last year.
Street expects ILMN’s revenue and EPS for the fourth quarter (ended December 2024) to be $1.10 billion and $0.92, respectively. Moreover, the company topped the consensus revenue estimates in all four trailing quarters, which is impressive.
ILMN’s stock has gained 8% over the past six months to close the last trading session at $124.68.
ILMN’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
ILMN has an A grade for Growth and a B for Sentiment and Quality. It is ranked #13 in the same industry.
In addition to the POWR Ratings we’ve stated above, we also have ILMN ratings for Momentum, Stability, and Value. Get all ILMN ratings here.
Stock #1: Exelixis, Inc. (EXEL)
EXEL is an oncology company that focuses on discovering, developing, and commercializing new medicines for difficult-to-treat cancers.
EXEL’s trailing-12-month gross profit margin of 96.25% is 65.4% higher than the respective industry average of 58.20%. Its trailing-12-month EBIT margin of 29.22% is significantly higher than the industry average of 2.57%.
During the third quarter that ended September 30, 2024, EXEL’s total revenue increased 14.3% year-over-year to $539.54 million. Its income from operations came in at $136.07 million compared to a year-ago loss of $17.58 million.
In addition, the company’s non-GAAP net income amounted to $135.66 million or $0.47 per share, reflecting a considerable improvement from $32.09 million or $0.10 per share, respectively, recorded in the same period last year.
Recently, the company announced its preliminary unaudited financial results for the fiscal year 2024, provided financial guidance for the fiscal year 2025, and delivered an update on its business. Total revenues are projected to be between $2.15 billion and $2.25 billion (previous guidance: $1.975-$2.075 billion).
Analysts expect EXEL’s EPS for the fourth quarter (ended December 2024) to increase 56.2% year-over-year to $0.42. Its revenue for the same quarter is expected to come in at $563.23 million, reflecting a growth of 17.4% from the prior year. Furthermore, the company has surpassed the consensus EPS and revenue estimates in three of the trailing four quarters, which is promising.
Over the past nine months, the stock has surged 53.2%, closing the last trading session at $33.55.
EXEL’s POWR Ratings reflect its bright outlook. 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 and Sentiment. It is ranked #5 in the same industry. Click here to see the additional ratings for EXEL (Momentum and Stability).
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ILMN shares were trading at $122.53 per share on Thursday afternoon, down $2.15 (-1.72%). Year-to-date, ILMN has declined -8.31%, versus a 3.25% 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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