The biotech sector is rapidly expanding thanks to solid demand, technological improvements, and government incentives. Therefore, quality biotech stocks Genmab A/S (GMAB), Incyte Corporation (INCY), and LAVA Therapeutics N.V. (LVTX), which look poised to grow, could be wise additions to your portfolio now.
Generative AI in biotech is gaining traction and holds potential for drug discovery, protein engineering, and personalized medicine applications. The global Generative AI in Biotech Market is estimated to be worth $472 million by 2032, increasing at a 24.9% CAGR.
Moreover, the biotechnology market is expected to reach $2.77 trillion by 2030, growing at a CAGR of 14.2%. The biotechnology market is expanding rapidly as a result of rising personalized medicine demand, genomics breakthroughs, food and agriculture product demand, and government investment.
Investors’ interest in biotech stocks is evident from the Virtus LifeSci Biotech Products ETF (BBP) 12.8% returns over the past nine months.
Let’s delve deeper into the fundamentals of the featured stocks.
Genmab A/S (GMAB)
Headquartered in Copenhagen, Denmark, GMAB develops antibody therapeutics for the treatment of cancer and other diseases, primarily in Denmark.
GMAB’s trailing-12-month gross profit margin of 100% is 79.7% higher than the industry average of 55.64%. Its trailing-12-month EBITDA margin of 43.45% is significantly higher than the industry average of 3.93%.
GMAB’s revenue increased 34.7% year-over-year to DKK 2.85 billion ($413.74 million) for the fiscal first quarter that ended March 31, 2023.
The company’s total assets and cash and cash equivalents amounted to DKK30.39 billion ($4.41 billion) and DKK12.29 billion ($1.78 billion) for the period that ended March 31, 2023, compared to DKK30.29 billion($4.39 billion and DKK9.89 billion and $1.43 billion) for the period ended December 31, 2022, respectively.
Over the past three years, GMAB’s revenue and EBITDA have grown at 39.3% and 32.1% CAGRs, respectively. Moreover, its total assets have grown at a 25.7% CAGR over the same period.
The consensus revenue estimate of $2.73 billion for the year ending December 2024 represents a 17.9% increase year-over-year. Its EPS is expected to grow 53.9% year-over-year to $1.42 for the same period. It surpassed EPS estimates in three of four trailing quarters. GMAB’s shares have gained 11.2% over the past year to close the last trading session at $37.68.
GMAB’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
GMAB has a B grade for Growth and Value. Within the Biotech industry, it is ranked #27 out of 390 stocks. Click here for the additional POWR Ratings for Momentum, Sentiment, Stability, and Quality for GMAB.
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.
INCY’s forward non-GAAP PEG multiple of 0.71 is 66.7% lower than the industry average of 2.12. Its forward EV/Sales multiple of 2.90 is 18.9% lower than the industry average of 3.58.
INCY’s trailing-12-month EBITDA margin of 16.59% is 322% higher than the industry average of 3.93%. Its trailing-12-month asset turnover ratio of 0.64 is 80.8% higher than the industry average of 0.35.
For the fiscal 2023 first quarter that 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.
Also, its total liabilities and stockholders’ equity came in at $5.80 billion for the period that ended March 31, 2023, compared to $5.84 billion for the period that ended December 31, 2022.
Over the past three years, INCY’s revenue has grown at 15.9% CAGR. Moreover, its total assets have grown at a 28.2% CAGR over the same period.
Street expects INCY’s revenue to increase 9.3% year-over-year to $3.71 billion for the year ending December 2023. Its EPS is expected to increase 21.4% year-over-year to $3.37 for the same period. Over the past month, the stock has gained 1.11% to close the last trading session at $62.07.
It’s no surprise that INCY has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Value and a B for Quality. It is ranked #26 in the same industry.
Beyond what is stated above, we’ve also rated INCY for Stability, Momentum, Growth, and Sentiment. Get all INCY ratings here.
LAVA Therapeutics N.V. (LVTX)
Headquartered in Utrecht, the Netherlands, LVTX is a clinical-stage immuno-oncology company that specializes in cancer treatments. Through its Gammabody platform, LVTX creates bispecific antibodies that activate gamma delta T cells to elicit an anti-tumor immune response, leading to better outcomes for cancer patients.
LVTX’s trailing-12-month Price/Book multiple of 0.67 is 36.7% lower than the industry average of 2.13. Its trailing-12-month Price/Sales multiple of 2.57 is 29.1% lower than the industry average of 4.06.
LVTX’s revenue from contracts with customers increased 19.8% year-over-year to $1.22 million for the first quarter that ended March 31, 2023. Its cash and cash equivalents came in at $100.60 million for the period that ended March 31, 2023, compared to $100.33 million for the period that ended December 31, 2022.
Over the past three years, INCY’s total assets have grown at a 153.6% CAGR.
The stock has gained 35% over the past three months to close the last trading session at $1.95.
LVTX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It is ranked #30 in the same industry. It has an A grade for Sentiment and a B for Value. To see additional LVTX’s ratings for Growth, Stability, Momentum, and Quality, click here.
What To Do Next?
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GMAB shares were trading at $37.76 per share on Monday morning, up $0.08 (+0.21%). Year-to-date, GMAB has declined -10.90%, versus a 15.64% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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