Mid-cap stocks provide a balanced investment option, combining small-cap growth potential with large-cap stability, ideal for long-term wealth building. Similarly, the pharma industry is promising due to increasing demand driven by factors such as rising chronic illnesses, advancements in medical technology, and improved healthcare accessibility.
Investors seeking growth might consider investing in robust mid-cap pharma stocks: Amphastar Pharmaceuticals, Inc. (AMPH), Catalyst Pharmaceuticals, Inc. (CPRX), and ACADIA Pharmaceuticals Inc. (ACAD). Analysts foresee potential increases of 50% or more for these stocks.
The World Bank forecasts global economic growth to stabilize at 2.6% in 2024, rising slightly to 2.7% in 2025-26, supported by lower global inflation and cautious central bank policies. The US economy grew by 1.4% in Q1 2024, slightly higher than earlier estimates. This stable global growth and improved economic conditions are bolstering mid-cap pharma stocks.
JP Morgan emphasizes that mid-cap stocks, which are currently trading at near-record valuation discounts, present a promising opportunity for long-term investment growth. The anticipated addition of 190,000 new jobs in June 2024 also underscores the robust strength of the job market, further supporting potential gains in mid-cap stocks amidst the current economic conditions.
On top of it, biomedical science and accessible pharmaceutical tech are boosting the sector, with rising demand for therapies like cell and gene therapies and precision medicines. AI is enhancing biopharma manufacturing, and machine learning is advancing drug discovery. As a result, global pharmaceutical revenues are projected to grow from $1.16 trillion this year to $1.47 trillion by 2028, with a 6.2% CAGR.
Considering these conducive trends, let's examine the fundamentals of the above-mentioned mid-cap Medical - Pharmaceuticals stocks, starting with the third choice.
Stock #3: Amphastar Pharmaceuticals, Inc. (AMPH)
AMPH is a biopharmaceutical company that develops, manufactures, markets and sells generic and proprietary injectable, inhalation, and intranasal products in the United States, China, and France. The company has a $1.88 billion market capitalization.
On May 22, 2024, AMPH announced that the FDA has approved its Albuterol Sulfate Inhalation Aerosol for treating bronchospasm and exercise-induced bronchospasm in patients aged four and older. The product is bioequivalent to Teva's ProAir HFA and will be launched in the third quarter of 2024.
In terms of the trailing-12-month levered FCF margin, AMPH's 30.79% is considerably higher than the 1.29% industry average. Its 31.29% trailing-12-month EBIT margin is significantly higher than the 1.78% industry average. Likewise, the stock's 0.58x trailing-12-month asset turnover ratio is 42.2% higher than the 0.40x industry average.
AMPH's total revenues for the first quarter that ended March 31, 2024, rose 12.6% year-over-year to $171.84 million. Its gross profit increased 22% year-over-year to $90.10 million. Additionally, the company's non-GAAP net income came in at $55.30 million, or $1.04 per share, up 72.1% and 67.7% over the prior-year quarter, respectively.
For the quarter ended June 30, 2024, AMPH's EPS and revenue are expected to increase 19.5% and 19.1% year-over-year to $0.78 and $173.54 million, respectively. It surpassed the consensus EPS estimates in three of the trailing four quarters.
Over the past month, AMPH's stock has declined 9% to close the last trading session at $38.51. The average analyst price target of $63.67 indicates a 65.3% upside potential.
It's no surprise that AMPH has an overall rating of B, which translates to a Buy in our proprietary POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Growth and Value. Within the Medical - Pharmaceuticals industry, it is ranked #38 out of 154 stocks. To see AMPH's Momentum, Stability, Sentiment, and Quality ratings, click here.
Stock #2: Catalyst Pharmaceuticals, Inc. (CPRX)
Valued at $1.86 billion by market cap, CPRX is a commercial-stage biopharmaceutical company that focuses on developing and commercializing therapies for people with rare, debilitating, chronic neuromuscular and neurological diseases.
On May 30, 2024, CPRX announced that the FDA had approved an increased maximum daily dose of FIRDAPSE for treating Lambert-Eaton myasthenic syndrome (LEMS) from 80 mg to 100 mg. This approval provides greater flexibility in treatment regimens for adult and pediatric patients.
In terms of the trailing-12-month gross profit margin, CPRX's 64.33% is 12.2% higher than the 57.33% industry average. Its 27.72% trailing-12-month EBITDA margin is 380.9% higher than the 5.77% industry average. Also, the stock's 19.04% trailing-12-month EBIT margin is 968.3% higher than the 1.78% industry average.
During the fiscal first quarter that ended March 31, 2024, CPRX's total revenues increased 15.4% year-over-year to $98.51 million. Its operating income amounted to $27.13 million. Furthermore, its non-GAAP net income and net income per share stood at $46.77 million and $0.38, respectively.
In addition, as of March 31, 2024, CPRX's cash and cash equivalents were $310.41 million, compared to $137.64 million as of December 31, 2023.
Street expects CPRX's revenue for the quarter ended June 30, 2024, to increase 12.4% year-over-year to $111.96 million. Its EPS for fiscal 2024 is expected to rise 49.5% year-over-year to $0.94.
Over the past nine months, the stock has gained 34.9% to close the last trading session at $15.77. The average analyst price target of $26.50 indicates a 68% upside potential.
CPRX's strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system.
It has a B grade for Value, Sentiment, and Quality. It is ranked #30 in the same industry. Beyond what we stated above, we also have given CPRX grades for Growth, Momentum, and Stability. Get all the CPRX ratings here.
Stock #1: ACADIA Pharmaceuticals Inc. (ACAD)
ACAD is a biopharmaceutical company that focuses on developing and commercializing innovative medicines to address unmet medical needs in central nervous system (CNS) disorders and rare diseases. ACAD is valued at $2.65 billion by market cap.
On April 22, 2024, ACAD announced that Health Canada has accepted its New Drug Submission for Trofinetide, intended for the treatment of Rett syndrome, and has granted it Priority Review. If approved, Trofinetide will be the first treatment option for Rett syndrome available in Canada.
In terms of the trailing-12-month levered FCF margin, ACAD's 4.23% is 227.8% higher than the 1.29% industry average. Moreover, the stock's 1.08x trailing-12-month asset turnover ratio is 166.1% higher than the 0.40x industry average.
For the fiscal first quarter that ended on March 31, 2024, ACAD's total revenues increased 73.7% year-over-year to $205.83 million. Its income from operations amounted to $15.21 million, compared to a loss from operations of $53.58 million in the previous year's quarter.
For the same quarter, ACAD's net income and EPS stood at $16.56 million and $0.10, respectively, compared to a net loss and net loss per share of $43.02 million and $0.27 in the year-ago quarter, respectively. As of March 31, 2024, its cash, cash equivalents, and investment securities stood at $470.50 million compared to $438.90 million as of December 31, 2023.
Analysts expect ACAD's EPS for the quarter ended June 30, 2024, to increase considerably year-over-year to 0.19. Its revenue for the same is expected to grow 42.6% year-over-year to $235.58 million.
Over the past month, the stock has gained 6.2% to close the last trading session at $16.04. The average analyst price target of $27.36 indicates a 70.6% upside potential.
ACAD's POWR Ratings reflect its solid prospects. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
ACAD has an A grade for Growth and a B for Value and Quality. Within the Medical – Pharmaceuticals industry, it is ranked #13. To access ACAD's additional ratings for Momentum, Stability, and Sentiment, click here.
What To Do Next?
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ACAD shares were trading at $15.80 per share on Tuesday afternoon, down $0.24 (-1.50%). Year-to-date, ACAD has declined -49.54%, versus a 15.77% 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.
3 Mid-Cap Stocks Analysts Believe Will Soar 50% or More StockNews.com
