The biotechnology industry is poised for robust growth due to increased demand for personalized treatments, increasing prevalence of chronic diseases, increased investment in R&D, and advances in technology. Therefore, investors may consider buying fundamentally strong biotech stocks Innoviva ( INVA ), ANI Pharmaceuticals ( ANIP ), and United Therapeutics ( UTHR ). Read more.
The biotechnology industry thrives because of constant innovation and the steady demand for cutting-edge drugs and therapies. The sector is benefiting from an aging population and growing demand for effective treatments for both uncommon and common diseases, thus contributing to its promising prospects.
Therefore, it may be wise to consider buying fundamentally strong biotech stocks: Innoviva, Inc.WITH LIMITED ABILITIES), ANI Pharmaceuticals, Inc.AniPet), and United Therapeutics Corporation (UTHR).
Before we delve into their fundamentals, let's discuss why the biotech industry is well positioned for growth.
Advances in gene editing, personalized medicine, synthetic biology and government initiatives are shaping the growth of the biotechnology industry. A survey by ICON plc, involving more than 130 biotech executives, showed this 60% of respondents expected an increase in R&D spending, while only 2% expected a decrease in funding.
The growing need for personalized medicine and the creation of additional orphan drug formulations to combat the growing prevalence of chronic and rare diseases are generating new avenues for biotechnological applications and driving the growth of biotech firms.
The sector's steady expansion has been fueled by an increase in clinical trials, expanding drug pipelines and increased investment in pharmaceutical R&D. The clinical trials market is projected to reach USD 120.97 billion in 2024. It is expected to grow at a CAGR of 4.3% to reach $184.61 billion by 2034.
In particular, biotech companies are leveraging cutting-edge technologies such as artificial intelligence (AI) and big data analytics to drive drug innovation and development. AI has made significant strides in identifying drug targets, particularly in anti-cancer efforts. The global artificial intelligence for pharmaceutical and biotechnology market, worth $850 million this year, is expected to grow by a 30.5% CAGR to reach $4.20 billion by 2027.
Investor interest in biotech stocks is evident from the VanEck Biotech ETF (BBH) 4.2% returns over the past month. Moreover, the global biotechnology market is projected to reach $3.88 trillion by 2030expanding at a CAGR of 14% from 2024 to 2030.
With these favorable trends in mind, let's analyze the fundamental aspects of all three Biotechnology choices, starting with the third choice.
Stock #3: Innoviva, Inc. (WITH LIMITED ABILITIES)
INVA engages in the development and commercialization of pharmaceutical products in the United States and internationally. The company's products include RELVAR/BREO ELLIPTA, ANORO ELLIPTA and TRELEGY ELLIPTA.
On March 4, 2024, INVA entered into a $35 million secured credit agreement with Armata Pharmaceuticals, Inc. (ARMP). The agreement was aimed at supporting the advancement of clinical trials for ARMP's phage-based therapeutic candidates targeting antibiotic-resistant infections. This move demonstrated INVA's continued support for ARMP's initiatives in the fight against antibiotic resistance.
As for offspring-12-months EBITDA margin, 56.93% of INVA is 914.2% higher than the industry average of 5.61%. Likewise, its trailing 12-month EBIT margin of 45.43% is significantly higher than the industry average of 0.49%. Additionally, its leveraged FCF margin of 38.85% trailing 12 months is significantly higher than the industry average of 0.35%.
INVA's total revenue for the fourth quarter ended December 31, 2023, increased 30.4% to $85.84 million. The company's net product sales were up 34.9% over the prior-year quarter to $19.68 million.
Additionally, its net income attributable to INVA shareholders and net income per share totaled $61.53 million and $0.76, respectively, compared to a net loss and net loss per share of $68.31 million and $0.98, respectively. respectively, in the quarter of the previous year.
Analysts expect INVA's EPS for the quarter ending June 30, 2024 to be significantly higher year-over-year to $0.22. Its revenue for the quarter ending September 30, 2024, is expected to grow 8.7% year over year to $73.14 million. Over the past year, INVA shares have risen 35.2% to close the last trading session at $14.75.
INVA's POWR Ratings reflect stable prospects. It has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR ratings evaluate stocks on 118 different factors, each with its own weight.
It is ranked 38 out of 362 shares in Biotechnology industry. It has an A grade for value and a B grade for quality. Click here to see INVA's Growth, Momentum, Stability and Sentiment ratings.
Stock #2: ANI Pharmaceuticals, Inc. (AniPet)
ANIP is a biopharmaceutical company that develops, manufactures and markets branded and generic prescription pharmaceutical products in the United States and Canada. The company manufactures oral solid dosage, semi-solid, liquid and in-use products, as well as controlled substance and potency products.
On January 23, 2024, ANIP announced the release of Pentoxifylline Extended-Release Tablets, USP 400 mg, the generic version of Trental. With an annual US market estimated at approximately $19.7 million, ANIP aims to improve patient access to high-quality therapeutics, emphasizing its commitment to growth and reliability of supply in the generics business.
On January 16, 2024, ANIP announced the FDA approval and launch of Indomethacin Oral Suspension, USP, a generic version of Indocin Oral Suspension, with a Competitive Generic Therapy (CGT) designation and 180-day exclusivity, highlighting enhanced access to quality up. generics for products with limited competition.
In terms of trailing 12-month gross profit margin, ANIP's 62.71% is 9.5% higher than the industry average of 57.29%. Likewise, its leveraged FCF margin of 23.17% trailing 12 months is significantly higher than the industry average of 0.35%. Also, its trailing 12-month asset turnover ratio of 0.58x is 49.2% higher than the industry average of 0.39x.
For the fourth quarter ended December 31, 2023, ANIP's net income rose 39.7% year over year to $131.65 million. Its adjusted EBITDA increased 29.5% from a year ago to $30.20 million. Additionally, adjusted net income available to common stockholders and adjusted earnings per share increased 54.3% and 31.6% from the prior year period to $19.20 million and $1, respectively.
The Street expects ANIP's revenue for the quarter ending March 31, 2024, to grow 17.9% year over year to $125.93 million. Likewise, its fiscal 2025 EPS is expected to grow 12.8% year-over-year to $5.03. It beat the Street's EPS estimates in each of the following four quarters. Over the past year, the stock has gained 61.5% to close the last trading session at $66.23.
ANIP's positive outlook is reflected in its POWR ratings. It has an overall rating of B, equal to a Buy in our proprietary rating system.
It has an A for Growth and Feelings and a B for Value. It is ranked 16th in the same industry. To see ANIP ratings for Momentum, Stability and Quality, Click here.
Stock #1: United Therapeutics Corporation (UTHR)
United Therapeutics Corporation is a biotechnology company engaged in the development and commercialization of products to address the unmet medical needs of patients with chronic and life-threatening diseases internationally.
On December 13, 2023, UTHR and Miromatrix Medical Inc. (MIRO) announced the successful completion of the tender offer and merger, with UTHR acquiring all of MIRO's outstanding shares, strengthening its position as a wholly owned subsidiary and furthering the development of MIRO's mirocidin product.
In terms of trailing 12-month equity/sales, UTHR's 9.90% is 142.2% higher than the industry average of 4.09%. Likewise, the leveraged FCF margin of 26.09% trailing 12 months is significantly higher than the industry average of 0.35%. Additionally, its trailing 12-month EBITDA margin of 53.24% is 848.5% higher than the industry average of 5.61%.
UTHR's total revenue for the fourth quarter, which ended December 31, 2023, increased 25.1% year over year to $614.70 million. Its operating income rose 48.1% year over year to $260.10 million. The company's net income totaled $217.10 million, or $4.36 per share, up 64.3% and 63.3%, respectively, over the year-ago quarter.
For the quarter ending March 31, 2024, UTHR's EPS is expected to grow 16% year over year to $5.64. Its revenue for the same quarter is expected to grow 22.9% year over year to $622.92 million. It beat consensus EPS estimates in each of the following four quarters. Over the past month, the stock has gained 12.9% to close the last trading session at $241.27.
It's no surprise that UTHR has an overall rating of A, which translates to a strong buy in our proprietary rating system.
It has a B grade for value and quality. Within the Biotechnology industry, it ranks #9. Beyond what we said above, we've also rated UTHR for Growth, Momentum, Stability, and Feel. Get all UTHR ratings here.
What should be done next?
43-year investment veteran Steve Reitmeister has just released his market outlook for 2024, along with his trading plan and 11 top picks for the year ahead.
Shares of UTHR were flat in premarket trading on Thursday. Year-to-date, UTHR has gained 9.72%, versus a gain of 8.55% in the benchmark S&P 500 over the same period.
About the Author: Abhishek Bhuyan
Abhishek started his professional journey as a financial journalist due to his keen interest in discerning the underlying factors that influence the future performance of financial instruments.
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