Interest in the biotech industry grew significantly during the COVID-19 pandemic as several companies in this space helped the world fight against the virus by developing vaccines and antivirals in record time.
Biotech companies are creating new, more straightforward ways to treat various diseases. An aging population, rising healthcare spending, and breakthrough developments should drive the industry’s growth. The global biotechnology market is expected to grow at a CAGR of 17.8% to $3.44 trillion by 2030.
Investors’ interest in biotech stocks is evident from the SPDR S&P Biotech ETF’s (XBI) 38.3% returns and the iShares Biotechnology ETF’s (IBB) 19.2% returns over the past three months.
Given this backdrop and the inelastic demand for biotech solutions, it could be wise to buy fundamentally sound biotech stocks Gilead Sciences, Inc. (GILD), Biogen Inc. (BIIB), Jazz Pharmaceuticals plc (JAZZ), Amgen Inc. (AMGN), and Vertex Pharmaceuticals Incorporated (VRTX).
Gilead Sciences, Inc. (GILD)
GILD is a biopharmaceutical company focusing on developing and commercializing medicine for treating life-threatening diseases, including HIV, viral hepatitis, and cancer.
On August 4, 2022, GILD announced that it would acquire MiroBio, a U.K.-based biotechnology company. This acquisition provides the GILD with MiroBio’s proprietary discovery platform and the entire portfolio of immune inhibitory receptor agonists.
GILD’s total revenue increased 0.7% year-over-year to $6.26 billion for the fiscal second quarter ended June 30, 2022. The company’s total product sales from the HIV segment increased 7.3% year-over-year to $4.22 billion. Its current liabilities declined 20.5% to $9.22 billion for the quarter ended June 30, 2022, compared to $11.61 billion for the fiscal year ended December 31, 2022.
Analysts expect GILD’s EPS to increase 102.2% year-over-year to $1.40 for the quarter ending December 31, 2022. It surpassed Street EPS estimates in three of the trailing four quarters. Over the past three months, the stock has gained 8% to close the last trading session at $66.21
GILD’s strong fundamentals are reflected in its POWR Ratings. According to our proprietary rating system, it has an overall rating of B, translating to a Buy. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Value and a B for Sentiment and Quality. Out of the 402 stocks in the Biotech industry, it is ranked #9. Click here to see the other ratings of GILD for Growth, Momentum, and Stability.
Biogen Inc. (BIIB)
BIIB discovers, develops, manufactures, and delivers therapies for treating neurological and neurodegenerative diseases. It offers TECFIDERA, AVONEX, PLEGRIDY, and FAMPYRA for treating MS; SPINRAZA for SMA treatment; ADUHELM for treating Alzheimer’s; and FUMADERM for the treatment of severe plaque psoriasis.
On July 26, 2022, BIIB announced that the U.S. FDA had accepted a New Drug Application (NDA) for tofersen, an investigational drug for superoxide dismutase 1 (SOD1) amyotrophic lateral sclerosis (ALS). BIIB’s M.D., M.P.H., Head of Global Safety and Regulatory Sciences, and Interim Head of R&D Priya Singhal said, “The available data show that tofersen has the potential to make a meaningful difference for people with SOD1-ALS.”
For the fiscal second quarter ended June 30, 2022, BIIB’s total cost and expenses declined 39.8% year-over-year to $1.32 billion. The company’s net income increased 135.9% year-over-year to $1.05 billion. Also, its EPS came in at $7.24, representing an increase of 142.1% year-over-year.
For the quarter ending December 31, 2022, BIIB’s EPS is expected to increase 2.3% year-over-year to $3.47. It surpassed consensus EPS estimates in three of the trailing four quarters. Over the past three months, the stock has gained 11.7% to close the last trading session at $222.38.
BIIB’s POWR Ratings reflect solid prospects. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has an A grade for Value and Quality and a B for Sentiment. It is ranked #3 in the same industry. To see the other ratings of BIIB for Growth, Momentum, and Stability, click here.
Jazz Pharmaceuticals plc (JAZZ)
Headquartered in Dublin, Ireland, JAZZ is a biopharmaceutical company focused on developing and commercializing products that address various unmet medical needs. Its leading products include Xyrem for cataplexy and excessive daytime sleepiness; Sunosi for EDS and obstructive sleep apnea; Erwinaze for acute lymphoblastic leukemia; Defitelio for hepatic veno-occlusive disease; and Zepzelca for small cell lung cancer.
On May 9, 2022, JAZZ announced that it had completed the divestiture of Sunosi (solriamfetol) in the U.S. to Axsome Therapeutics, Inc. (AXSM). JAZZ’s Chairman and CEO said, “The divestiture of Sunosi enables us to sharpen our focus on the strategic areas where we see the most opportunity for sustainable growth and enhanced shareholder value.”
JAZZ’s total revenues increased 24% year-over-year to $932.87 million for the second quarter ended June 30, 2022. The company’s adjusted net income increased 27% year-over-year to $305.46 million. Also, its adjusted EPS came in at $4.30, representing an increase of 10.2% year-over-year.
Analysts expect JAZZ’s EPS and revenue for the quarter ending September 30, 2022, to increase 8.1% and 12.5% year-over-year to $4.54 and $938.93 million, respectively. It surpassed Street EPS estimates in three of the trailing four quarters. The stock has gained 25.8% year-to-date to close the last trading session at $160.26.
JAZZ’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has an A grade for Growth and Value and a B for Sentiment. Within the same industry, it is ranked #5. Click here to see the other JAZZ ratings for Momentum, Stability, and Quality.
Amgen Inc. (AMGN)
AMGN is a biotechnology company that discovers, develops, manufactures, and delivers various human therapeutics. It operates in the human therapeutics segment.
On August 4, 2022, AMGN announced that the company had entered into a definitive agreement to acquire ChemoCentryx, Inc. (CCXI). AMGN’s Chairman and CEO Robert A. Bradway said, “The acquisition of ChemoCentryx represents a compelling opportunity for Amgen to add to our decades-long leadership in inflammation and nephrology with TAVNEOS, a transformative, first-in-class treatment for ANCA-associated vasculitis.”
For the fiscal second quarter ended June 30, 2022, AMGN’s total revenues increased 1% year-over-year to $6.59 billion. Its non-GAAP operating expenses declined 33.7% year-over-year to $3.26 billion. Also, its non-GAAP net income increased 145.3% year-over-year to $2.49 billion. In addition, its non-GAAP EPS came in at $4.65, representing an increase of 162.7% year-over-year.
For fiscal 2022, analysts expect AMGN’s EPS and revenue to increase 2% and 0.8% year-over-year to $17.44 and $26.19 billion, respectively. It surpassed consensus EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 21% to close the last trading session at $251.08.
AMGN’s POWR Ratings reflect solid prospects. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
It has an A grade for Quality and a B for Value. It is ranked #11 in the Biotech industry. To see the other ratings of AMGN for Growth, Momentum, Stability, and Sentiment, click here.
Vertex Pharmaceuticals Incorporated (VRTX)
VRTX is a biotechnology company focusing on developing and commercializing therapies to treat cystic fibrosis (CF) and advancing its research and development programs in other indications. The company’s marketed medicines include TRIKAFTA/KAFTRIO, SYMDEKO/SYMKEVI, ORKAMBI, and KALYDECO.
On January 11, 2022, VRTX announced that the European Commission had approved the label extension of KAFTRIO (ivacaftor/tezacaftor/elexacaftor) in a combination regimen with ivacaftor for treating patients with cystic fibrosis in the age group 6-11 who have at least one F508del mutation in the cystic fibrosis transmembrane conductance regulator gene.
VRTX’s net product revenues increased 22.4% year-over-year to $2.19 billion for the second quarter ended June 30, 2022. Its non-GAAP operating income increased 1,571.8% year-over-year to $1.18 billion. The company’s non-GAAP net income increased 2,062.8% year-over-year to $930 million. In addition, its non-GAAP EPS came in at $3.60, representing an increase of 2,017.6% year-over-year.
Analysts expect VRTX’s EPS and revenue for the quarter ending September 30, 2022, to increase 2.4% and 11.9% year-over-year to $3.65 and $2.22 billion, respectively. It surpassed Street EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 63.5% to close the last trading session at $305.53.
VRTX’s POWR Ratings reflect solid prospects. The company has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has an A grade for Quality and a B for Value and Sentiment. It is ranked first in the same industry. Click here to see the additional ratings of VRTX for Growth, Momentum, and Stability.
GILD shares were trading at $65.78 per share on Tuesday morning, down $0.43 (-0.65%). Year-to-date, GILD has declined -7.11%, versus a -8.81% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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