The biotech industry rose to prominence during the pandemic as it was vital in bringing vaccines and therapies. Despite witnessing a slowdown, the biotech industry is well-positioned for long-term growth.
Amid this backdrop, it could be wise to buy fundamentally strong biotech stocks Corcept Therapeutics Incorporated (CORT), Ligand Pharmaceuticals Incorporated (LGND), and Acorda Therapeutics, Inc. (ACOR) to capitalize on the industry tailwinds.
Before diving deeper into their fundamentals, let’s discuss why the industry is well-positioned for growth.
Biotech companies have the potential for massive growth as they have various products at any given time under development. Approval of any of these products and their subsequent commercialization can generate stellar returns. However, there exists the risk of regulatory challenges and the possibility of their drugs never making it to the market.
Nevertheless, the biotech industry is expected to thrive due to a rapidly aging population, rising healthcare costs, the need for effective treatments for complex diseases, and the prevalence of chronic diseases. Investments in research and development (R&D) will help the industry to develop advanced drugs, therapies, and treatments.
Moreover, President Biden signed an executive order last year to launch the National Biotechnology and Biomanufacturing Initiative to encourage biotech production and research in the U.S.
In terms of revenue, the global biotechnology market is projected to grow at a CAGR of 14.2% to reach $2.77 trillion by 2030. Investors’ interest in biotech stocks is evident from the SPDR S&P Biotech ETF’s (XBI) 11.5% returns over the past three months.
Let’s take a closer look at the fundamentals of the featured stocks.
Corcept Therapeutics Incorporated (CORT)
CORT engages in discovering and developing drugs for treating severe metabolic, oncologic, endocrine, and neurological disorders.
In terms of the trailing-12-month EBITDA margin, CORT’s 24.50% is 554.7% higher than the 3.74% industry average. Likewise, its 98.67% trailing-12-month gross profit margin is 77.3% higher than the 55.64% industry average. Additionally, its 0.76x trailing-12-month asset turnover ratio is 115.5% higher than the 0.35x industry average.
CORT’s revenues for the fiscal first quarter ended March 31, 2023, rose 12.8% year-over-year to $105.65 million. The company’s net income attributable to common stockholders came in at $15.81 million. Additionally, its EPS came in at $0.14.
For the quarter ending December 31, 2023, CORT’s EPS is expected to increase 26.2% year-over-year to $0.18. Its revenue for the quarter ended June 30, 2023, is expected to increase 6% year-over-year to $109.60 million. The stock has gained 11.8% year-to-date to close the last trading session at $22.71.
CORT’s POWR Ratings reflect this positive outlook. It has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Quality and a B for Value. It is ranked #19 out of 390 stocks in the Biotech industry. To see CORT’s ratings for Growth, Momentum, Stability, and Sentiment, click here.
Ligand Pharmaceuticals Incorporated (LGND)
LGND, a biopharmaceutical company, focuses on developing or acquiring technologies that help pharmaceutical companies to discover and develop medicines.
In terms of the trailing-12-month EBITDA margin, LGND’s 30.41% is 712.7% higher than the 3.74% industry average. Likewise, its 58.07% trailing-12-month gross profit margin is 4.4% higher than the 55.64% industry average. Likewise, its 7.59% trailing-12-month Capex/Sales is 63.4% higher than the 4.64% industry average.
For the fiscal first quarter that ended March 31, 2023, LGND’s total revenues increased 20.4% year-over-year to $43.98 million. Its adjusted net income from continuing operations rose 192.4% year-over-year to $39.90 million. Moreover, its adjusted net income per share from continuing operations rose 188.6% year-over-year to $2.28.
Street expects LGND’s EPS for the quarter ending September 30, 2023, to increase 550% year-over-year to $0.13. Its revenue for fiscal 2024 is expected to increase 13.6% year-over-year to $148.96 million. It surpassed the consensus EPS estimates in three of the four trailing quarters. Over the past nine months, the stock has gained 23.7% to close the last trading session at $68.85.
LGND’s POWR Ratings reflect solid prospects. It has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has an A grade for Growth and a B for Sentiment and Quality. It is ranked #18 in the same industry. Click here to see LGND’s ratings for Value, Momentum, and Stability.
Acorda Therapeutics, Inc. (ACOR)
ACOR, a biopharmaceutical company, develops and commercializes therapies for neurological disorders. The company markets Ampyra, an oral drug to improve walking in adults with multiple sclerosis; and Inbrija.
On May 8, 2023, ACOR and Hangzhou Chance Pharmaceuticals announced their partnership to distribute and supply INBRIJA in China, a treatment for Parkinson’s disease. The agreements include payments and milestones, and Chance plans to seek regulatory authorization. China’s aging population is projected to have around 5 million Parkinson’s disease patients by 2030.
Under the terms of the agreements, ACOR will receive a upfront payment of $2.5 million, a near term milestone payment of up to $6 million, $3 million upon regulatory approval, up to $132.50 million in sales milestones, and a fixed fee for each carton of INBRIJA supplied to Chance.
ACOR’s 72.02% trailing-12-month gross profit margin is 29.5% higher than the 55.64% industry average.
ACOR’s total revenues for the first quarter ended March 31, 2023, came in at $22.26 million. The company’s net loss narrowed 31.4% year-over-year to $16.82 million. Also, its net loss per share narrowed 62.7% year-over-year to $0.69.
Over the past nine months, the stock has gained 104.7% to close the last trading session at $15.15.
ACOR’s POWR Ratings reflect solid prospects. It has an overall rating of B, equating to a Buy in our proprietary rating system.
Within the Biotech industry, it is ranked #21. It has an A grade for Growth and a B for Value. For additional ACOR’s ratings for Momentum, Stability, Sentiment, and Quality, click here.
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CORT shares were trading at $22.66 per share on Thursday morning, down $0.05 (-0.22%). Year-to-date, CORT has gained 11.57%, versus a 18.01% 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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