The biotech industry has diversified and thrived, especially during the pandemic, owing to the advanced innovations and incessant efforts to curb the deadly virus. Moreover, the inelastic demand enjoyed by the industry makes it well-grounded to maintain its buoyancy in the upcoming times.
Against this backdrop, let us explore some biotech stocks Amgen Inc. (AMGN), Regeneron Pharmaceuticals, Inc. (REGN), United Therapeutics Corporation (UTHR), and Vanda Pharmaceuticals Inc. (VNDA), with overall A (Strong Buy) ratings in our proprietary POWR Ratings system.
The biotech industry has immense potential to generate tremendous opportunities for society, such as improving healthcare quality, increasing agricultural production, and producing a cleaner environment. The industry provided 2.1 million jobs and had a $2.9 trillion impact on the U.S. economy in 2021.
Even though macroeconomic challenges prevail, incredible scientific, medical, and technological breakthroughs are poised to keep the biotech industry on an upward trajectory, especially since biotechnology has numerous applications.
Also, on the backs of strong government initiatives aimed at the modernization of regulatory framework, bolstering of supply chains, and supporting the innovation ecosystem, the global biotechnology market size is poised to grow at a CAGR of 14% from 2023 to 2030.
Furthermore, over the past six months, the SPDR S&P Biotech ETF (XBI) has gained 8%, outpacing the S&P 500’s gains of 4.7%, substantiating investors’ interest in biotech stocks.
Hence, investors could capitalize on the industrial tailwinds and add biotech stocks AMGN, REGN, UTHR, and VNDA, with strong fundamentals, to their portfolios.
Amgen Inc. (AMGN)
AMGN discovers, develops, manufactures, and delivers human therapeutics globally. The company primarily focuses on inflammation, oncology/hematology, bone health, cardiovascular disease, nephrology, and neuroscience.
On May 9, AMGN and TScan Therapeutics, Inc. announced a multi-year collaboration that would use TScan’s proprietary target discovery platform, TargetScan, to identify the antigens recognized by T cells in patients with Crohn’s disease.
Under the terms of the agreement, a variety of modalities would be evaluated by AMGN to create therapeutics based on targets discovered and would retain all global development and commercial rights.
AMGN's first-quarter 2023 dividend of $2.13 per share was paid to all stockholders on March 8, 2023. Its annual dividend of $8.52 yields 3.81% on prevailing prices. The company’s dividend payouts have increased at a 10.1% CAGR over the past three years and 10.5% CAGR over the five years. Its four-year average dividend yield is 2.90%.
AMGN’s trailing-12-month gross profit margin of 74.93% is 34.2% higher than the 55.84% industry average. Its trailing-12-month EBITDA margin of 50.10% is significantly higher than the 1.79% industry average.
AMGN’s forward EV/EBITDA of 8.38x is 37.2% lower than the industry average of 13.34x. Its forward non-GAAP P/E multiple of 12.25 is 36.8% lower than the industry average of 19.39.
For the fiscal first quarter that ended March 31, 2023, AMGN’s total revenues stood at $6.11 billion, while its non-GAAP operating income came in at $2.82 billion. Its non-GAAP net income and non-GAAP EPS stood at $2.14 billion and $3.98, respectively. For the same quarter, AMGN’s cash and cash equivalents stood at $31.56 billion, up 383.5% year-over-year.
Moreover, AMGN’s total current assets came in at $44.70 billion as of March 31, 2023, compared to $22.19 billion as of December 31, 2022.
Street expects AMGN’s revenue and EPS for the fiscal year ending December 2023 to come in at $28.37 billion and $18.24, up 7.8% and 3.1% year-over-year, respectively. Additionally, it surpassed revenue and EPS estimates in three of the four trailing quarters.
The stock gained marginally intraday to close the last trading session at $223.99.
AMGN’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
AMGN has an A grade for Quality and B for Value and Stability. Within the 378-stock Biotech industry, it is ranked #11.
Beyond what we have mentioned above, one can see the additional AMGN grades for Growth, Sentiment, and Momentum here.
Regeneron Pharmaceuticals, Inc. (REGN)
REGN discovers, invents, develops, manufactures, and commercializes medicines for treating various diseases worldwide.
In March, the European Commission approved Dupixent as the first and only targeted medicine indicated to treat children aged six months to five years with severe atopic dermatitis in Europe. This could bolster the company’s topline.
In the same month, REGN and Sonoma Biotherapeutics, Inc. entered into a license and collaboration agreement to bring together REGN's VelociSuite® technologies with Sonoma's technology platform for the discovery, development, and commercialization of novel regulatory T-cell (Treg) therapies for autoimmune diseases.
REGN’s forward EV/EBITDA multiple of 12.20 is 8.5% lower than the industry average of 13.34. Its forward non-GAAP P/E multiple of 18.16 is 6.3% lower than the industry average of 19.39.
REGN’s trailing-12-month EBITDA margin of 41.04% is significantly higher than the 1.79% industry average. Its trailing-12-month ROCE, ROTC, and ROTA of 19.27%, 12.06%, and 13.91% compare to the industry averages of negative 43.20%, 23.26%, and 33.34%, respectively.
For the fiscal first quarter that ended March 31, 2023, REGN’s total revenues increased 6.6% year-over-year to $3.16 billion. Its non-GAAP net income and net income per share stood at $1.17 billion and $10.09, respectively. Moreover, its free cash flow for the quarter stood at $1.19 billion.
The consensus EPS estimate of $10.20 for the fiscal second quarter ending June 2023 represents a 4.5% improvement year-over-year. The consensus revenue estimate of $3.06 billion for the same quarter represents a 7.2% growth year-over-year. It surpassed the consensus EPS and revenues estimates in each of the trailing four quarters, which is impressive.
The stock has gained 13.7% over the past year to close the last trading session at $751.50. It has gained 1.3% over the past five days.
REGN’s solid fundamentals are reflected in its POWR Ratings. It has an overall rating of A, equating to a Strong Buy in our POWR Ratings system.
REGN has a B grade for Value, Momentum, and Quality. It is ranked #7 within the same industry.
Click here to see REGN’s additional POWR Ratings (Growth, Stability, and Sentiment).
United Therapeutics Corporation (UTHR)
UTHR is a biotechnology company that engages in developing and commercializing products to address the unmet medical needs of patients with chronic and life-threatening diseases internationally.
UTHR’s forward EV/EBITDA of 5.46x is 59.1% lower than the industry average of 13.34x. Its forward EV/EBIT multiple of 5.75 is 65.9% lower than the industry average of 16.84.
UTHR’s trailing-12-month EBITDA margin of 52.36% is significantly higher than the 1.79% industry average. Its trailing-12-month ROCE, ROTC, and ROTA of 15.66%, 11.30%, and 11.48% compare to the industry averages of negative 43.20%, 23.26%, and 33.34%, respectively.
UTHR’s revenues increased 9.7% year-over-year to $506.90 million in the fiscal first quarter that ended March 31, 2023, while its operating income stood at $284.40 million. Its net income and net income per share came in at $240.90 million and $4.86, respectively.
Moreover, its cash and cash equivalents for the same quarter came in at $1.16 billion, up 43.1% year-over-year. Also, UTHR’s retained earnings stood at $5.28 billion as of March 31, 2023, compared to $5.04 billion as of December 31, 2022.
The consensus EPS estimate of $4.72 for the fiscal second quarter (ending June 2023) represents a 36.4% improvement year-over-year. The consensus revenue estimate of $524.19 million for the same quarter represents a 12.3% growth year-over-year.
The stock has gained 16.1% over the past year to close the last trading session at $218.59. Over the past five days, the stock has gained 3.1%.
It is no surprise that UTHR has an overall rating of A, equating to a Strong Buy in our POWR Ratings system.
UTHR has a B grade for Value, Momentum, and Quality. It is ranked #10 within the same industry.
In addition to the POWR Ratings highlighted above, one can see UTHR’s Growth, Stability, and Sentiment ratings here.
Vanda Pharmaceuticals Inc. (VNDA)
VNDA is a biopharmaceutical company that focuses on the development and commercialization of therapies to address high unmet medical needs worldwide. VNDA’s commercial portfolio is currently comprised of two products, HETLIOZ and Fanapt.
VNDA’s trailing-12-month Price/Book multiple of 0.66 is 69.7% lower than the industry average of 2.19. Its forward Price/Sales multiple of 1.68 is 60.9% lower than the industry average of 4.30.
VNDA’s trailing-12-month gross profit margin of 90.89x is 62.8% higher than the 55.84% industry average. Its trailing-12-month EBITDA margin of 7.29% is 306.5% higher than the 1.79% industry average.
VNDA’s total revenues came in at $62.50 million for the fiscal first quarter that ended March 31, 2023, up 3.8% year-over-year. Also, its net income came in at $3.25 million, compared to a net loss of $6.43 million in the previous-year quarter. Its income per share came in at $0.06, compared to a net loss per share of $0.11 in the previous-year quarter.
Moreover, for the same quarter, its cash, cash equivalents, and restricted cash stood at $354.64 million, up 425.8% from the prior-year quarter.
Street expects VNDA’s revenue to come in at $211.90 million and $185.30 million for the fiscal years ending December 2023 and December 2024, respectively.
Over the past five days, the stock has declined 1.7% to close its last trading session at $6.20.
VNDA’s POWR Ratings reflect its solid prospects. The stock has an overall A rating, translating to a Strong Buy in our proprietary rating system.
It also has an A grade for Value and Quality and a B for Momentum. It is ranked #9 within the same industry.
Click here to see the VNDA’s ratings for Growth, Stability, and Sentiment.
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AMGN shares were trading at $224.96 per share on Tuesday morning, up $0.97 (+0.43%). Year-to-date, AMGN has declined -12.78%, versus a 9.61% 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.
4 Best Biotech Stocks According to POWR Ratings StockNews.com
