The biotech industry is well-positioned to thrive, owing to inelastic demand, rapid advancements, and government initiatives. So, quality biotech stocks Galapagos NV (GLPG), Organogenesis Holdings Inc. (ORGO) and Acorda Therapeutics, Inc. (ACOR) could be worth buying. These stocks are Buy-rated in our proprietary rating system.
Before delving deeper into the fundamentals of these stocks, let’s discuss what’s happening in the biotech industry.
Favorable initiatives from the government are significantly contributing to the industry's growth. Solid government support is being provided to modernize the regulatory environment, enhance approval processes and reimbursement policies, and standardize clinical trials. The FDA approved more than 50 new drugs in 2023, advancing public health care.
Moreover, the global Biotechnology market is expected to reach $4.15 billion by 2030 at a CAGR of 20.4%. The biotechnology market is expanding rapidly due to rising demand for personalized medicine, genomics breakthroughs, food and agriculture product demand, and government investment.
Moreover, according to Data Horizzon Research, the AI in biotechnology market share will grow at a 29.7% CAGR until 2032. Investors’ interest in biotech stocks is evident from the VanEck Vectors Biotech ETF’s (BBH) 9.4% returns over the past month and 3% over the past six months.
With these encouraging trends in mind, let’s delve into the fundamentals of the three Biotech stock picks, beginning with number 3.
Stock #3: Galapagos NV (GLPG)
Headquartered in Mechelen, Belgium, GLPG is an integrated biopharmaceutical company, engages in the discovery, development, and commercialization of?various medicines for high unmet medical need.
GLPG’s forward Price/Book multiple of 0.62 is 75.9% lower than the industry average of 2.58.
For the nine months ended September 30, 2023, GLPG’s total net revenues amounted to €448.85 million ($491.78 million), up 9.4% year-over-year. As of September 30, 2023, the company’s total current liabilities stood at €444.04 million ($486.51 million), compared to €522.54 million ($572.52 million) as of December 31, 2022. Also, its total liabilities amounted to €1.83 billion ($2.01 billion), compared to €2.21 billion ($2.42 billion) for the same period.
The consensus revenue estimate of $587.75 million for the fiscal year ending December 2023 represents a 9.7% increase year-over-year. Its EPS is expected to come in at $0.59 for the same year. It surpassed EPS estimates in three of four trailing quarters. GLPG’s shares have gained 11.5% over the past three months to close the last trading session at $40.29.
GLPG’s POWR Ratings reflect this optimistic 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.
GLPG also has a B grade for Value and Sentiment. It is ranked #26 out of 344 stocks in the Biotech industry. Click here for the additional POWR Ratings for Momentum, Growth, Stability and Quality for GLPG.
Stock #2: Organogenesis Holdings Inc. (ORGO)
ORGO is a regenerative medicine company that develops, manufactures, and commercializes solutions for the advanced wound care and surgical and sports medicine markets in the United States.
ORGO’s forward EV/Sales multiple of 1.11 is 68.8% lower than the industry average of 3.55. Its forward Price/Sales multiple of 1.05% is 73.1% lower than the industry average of 3.90.
ORGO’s trailing-12-month EBIT margin of 5.02% is 518.6% higher than the industry average of 0.81%. Its trailing-12-month EBITDA margin of 8.11% is 53.3% higher than the industry average of 5.29%.
For the third quarter that ended September 30, 2023, ORGO’s net revenue came in at $108.53 million. Its gross profit came in at $82.74 million. The company’s income from operations rose 352.5% year-over-year to $8.05 million.
For the same quarter, its net income increased significantly over the prior-year quarter to $3.17 million while its net income per share stood at $0.02, up 100% year-over-year.
Analysts expect ORGO’s revenue to grow 3.8% year-over-year to $457,07 million for the year ending December 2024. Its EPS is expected to grow 25% year-over-year to $0.05 for the same period. The stock has gained 72.7% over past nine months to close the last trading session at $3.73.
ORGO 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 #25 in the same industry.
Beyond what is stated above, we’ve also rated ORGO for Growth, Stability, Momentum and Sentiment. Get all ORGO ratings here.
Stock #1: Acorda Therapeutics, Inc. (ACOR)
ACOR is a biopharmaceutical company that develops and commercializes therapies for neurological disorders. The company markets Ampyra (dalfampridine), an oral drug to improve walking in adults with multiple sclerosis, and Inbrija, a medicine for OFF episodes in adults with Parkison’s disease treated with regular carbidopa/levodopa regimen.
ACOR’s trailing-12-month EV/Sales multiple of 1.53 is 58.8% lower than the industry average of 3.72. Its trailing-12-month Price/Sales multiple of 0.15% is 96% lower than the industry average of 3.76%.
ACOR’s trailing-12-month EBITDA margin of 10.35x is 95.6% higher than the 5.29x industry average. Its trailing-12-month levered FCF margin of 29.39% is significantly higher than the industry average of 0.25%.
For the third quarter of 2023, which ended September 30, ACOR’s INBRIJA® worldwide net revenue increased 7% year-over-year to $9.50 million, of which $8.10 million was derived from sales in the U.S., representing an increase of 4% compared to the prior year’s quarter. Also, the company reported AMPYRA® net revenue of $15.70 million.
As of September 30, 2023, the company had cash, cash equivalents, and restricted cash of $33.60 million.
Shares of ACOR has gained 30.3% over the past year to close the last trading session at $13.60.
ACOR’s strong outlook is reflected in its POWR Ratings. The stock has an overall B rating, which translates to a Buy in our proprietary system.
It has an A grade for Growth and a B for Value. Within the same industry, it is ranked #21. To see additional ACOR’s ratings for Stability, Sentiment, Momentum and Quality, click here.
What To Do Next?
Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these “death trap” stocks are lurking in your portfolio:
GLPG shares fell $0.16 (-0.40%) in premarket trading Friday. Year-to-date, GLPG has declined -9.22%, versus a 24.79% 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.
The post 3 Biotech Stocks Flashing Year-End 'Buy' Signals" appeared first on StockNews.com