Biotechnology advancements have created new ways of treating and preventing major life-threatening diseases. With accelerating advancement and increased tech integration in healthcare, renowned companies BioMarin Pharmaceutical Inc. (BMRN), Incyte Corporation (INCY), and Innoviva, Inc. (INVA) are expected to grow significantly in the long run.
Biotech stocks have been declining lately, as the banking crisis, inflation, and the Fed’s interest rate hikes took the limelight. However, the sector continues to outperform the broader market, as evident from the SPDR S&P Biotech ETF’s (XBI) 25.5% returns over the past year.
Biotech companies are profound for their development of groundbreaking treatments and therapies for diverse medical conditions and life-threatening diseases. Moreover, the global aging population, rising healthcare spending, and successful trial results have created fruitful growth opportunities for this sector.
Given the inelastic demand for healthcare products and medicines, the biotech industry is expected to perform well in the near term. Furthermore, driven by the development of promising treatments and potential breakthroughs in therapeutics and devices, the global biotechnology market is expected to grow at a CAGR of 12.3% to $1.30 trillion by 2030.
Buoyed by successful commercial sales that help yield quick returns, quality biotech stocks BMRN, INCY, and INVA seem poised to skyrocket in the near term. Let’s dig deeper into their fundamental strength.
BioMarin Pharmaceutical Inc. (BMRN)
BMRN engages in the development and commercialization of therapies for people with serious and life-threatening rare diseases and medical conditions. Its pipeline products include Vimizim, Naglazyme, Kuvan, Palynziq, Brineura, Roctavian, and Voxzogo.
On March 7, the U.S. Food and Drug Administration (FDA) accepted the company's supplemental New Drug Application to expand the use of VOXZOGO for injection to treat children with achondroplasia under the age of five.
As of March 31, approximately 1,500 children with achondroplasia were being treated with VOXZOGO across 35 active markets. In the first quarter, VOXZOGO growth accelerated in Japan and Brazil, followed by other markets. Based on these trends, BMRN updated the full-year 2023 VOXZOGO guidance to between $380 million and $430 million.
In terms of forward non-GAAP PEG, the stock is trading at 0.83x, 59.7% lower than the industry average of 2.06x.
BMRN’s revenue increased 14.8% year-over-year to $596.41 million in the fiscal first quarter (ended March 31). Its non-GAAP net income grew 17.2% from the year-ago value to $98.80 million, while its non-GAAP EPS increased 15.4% year-over-year to $0.60 over the period.
For the fiscal year 2023, the company expects its total revenues to come in between $2.38 billion and $2.50 billion, while its non-GAAP earnings per share is expected to be between $1.80 and $2.05.
The consensus EPS estimate of $0.47 for its fiscal third quarter (ending September 2023) represents a 4.9% improvement year-over-year. The consensus revenue estimate of $614.53 million for the next quarter indicates a 21.6% increase from the same period last year. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.
Over the past year, the stock has gained 23% to close its last trading session at $93.93.
BMRN’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has a B grade for Growth, Value, and Momentum. Among the 375 stocks in the Biotech industry, it is ranked #19. Click here to see the additional POWR Ratings of BMRN for Stability, Sentiment, and Quality.
Incyte Corporation (INCY)
INCY specializes in the development and commercialization of therapeutics in the United States. The company operates in two therapeutic areas: Hematology/Oncology; and Inflammation and Autoimmunity.
On May 1, INCY announced that adult patients with atopic dermatitis, when treated with Opzelura® (Ruxolitinib) cream, experienced a rapid and substantial improvement in itch, which was sustained and further improved through 28 days of treatment. Such positive results could reinforce Opzelura as an effective, well-tolerated topical non-steroidal treatment for atopic dermatitis.
On April 16, MorphoSys U.S. Inc., a fully owned subsidiary of MorphoSys AG (MOR) and INCY, announced the final five-year results of Phase 2 L-MIND study demonstrated prolonged, durable responses in relapsed or refractory diffuse large B-cell lymphoma (DLBCL) patients when treated with Monjuvi (tafasitamab-cxix) plus lenalidomide followed by Monjuvi monotherapy.
This should encourage and further support the use of the Monjuvi regimen as a potentially curative option for patients.
The stock’s forward non-GAAP PEG and EV/Sales of 0.73x and 3.10x, respectively, are 64.4% and 14.6% lower than the 2.06x and 3.62x industry averages, respectively.
During the fiscal 2023 first quarter (ended March 31), INCY's total revenues increased 10.3% year-over-year to $808.67 million, while its net product revenues grew 14.4% from the prior-year quarter to $693.24 million. The company's non-GAAP net income amounted to $84.58 million and $0.37 per share in the same period.
Analysts expect INCY's revenues to increase 17% year-over-year to $963.28 million in the fiscal third quarter (ending September 2023). Its EPS is expected to increase 69.6% year-over-year to $1.02 in the next quarter.
Shares of INCY have lost marginally over the past five days to close the last trading session at $65.28.
INCY's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. INCY also has an A grade for Value and a B for Momentum and Quality. The stock is ranked #18 out of 375 stocks in the same industry.
In addition to the POWR Ratings I have just highlighted, click here to see the INCY ratings for Growth, Stability, and Sentiment.
Innoviva, Inc. (INVA)
INVA is engaged in the development and commercialization of pharmaceutical products globally. Its royalty portfolio contains respiratory assets, partnered with Glaxo Group Limited (GSK), including RELVAR/BREO ELLIPTA; ANORO ELLIPTA; and TRELEGY ELLIPTA.
In terms of forward non-GAAP P/E, INVA is trading at 10.22x, 47.6% lower than the industry average of 19.49x. The stock’s forward EV/EBITDA of 8.26x is 38.2% lower than the 13.4x industry average. Furthermore, the stock’s forward EV/EBIT of 11.29x compares to the 16.93x industry average.
For the first quarter that ended March 31, 2023, INVA’s total expenses decreased 22.3% year-over-year to $35.23 million. Its attributable net income improved 121% and 110% from the prior-year quarter to $34.87 million and $0.42 per share, respectively, in the same period.
Street expects INVA’s revenue to increase 8.3% year-over-year to $72.81 million in the quarter ending September 30, 2023, while its EPS is expected to be $0.25 in the same period. Its EPS is expected to increase by 19.3% per annum over the next five years.
The stock has gained 8.3% over the past month to close the last trading session at $12.67.
INVA’s POWR Ratings reflect its solid prospects. The stock has an overall B rating, equating to Buy in our proprietary rating system.
Also, it has an A grade for Value and a B for Momentum and Quality. Within the same industry, it is ranked #17. To see additional POWR Ratings of INVA for Growth, Stability, and Sentiment, click here.
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BMRN shares were trading at $95.85 per share on Monday afternoon, up $1.92 (+2.04%). Year-to-date, BMRN has declined -7.38%, versus a 8.15% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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