Over time, the prevalence of chronic diseases has risen, attributed to an increasingly sedentary lifestyle. Moreover, rising demand for biotechnology tools in agricultural applications and increasing demand for genetics and regenerative medicine bolster the biotech industry.

Given the industry’s bright prospects, it could be wise to invest in fundamentally strong biotech stocks, such as BioMarin Pharmaceutical Inc. (BMRN), Alnylam Pharmaceuticals, Inc. (ALNY), and Corcept Therapeutics Incorporated (CORT), which have sky-high price targets.

The global biotechnology market is estimated to grow at a CAGR of 6.5% to reach $1.28 trillion by 2032. The market is being significantly driven by the rising investment in personalized medicine research and development, numerous advancements in genetic engineering, and the growing demand for sustainable agriculture.

Furthermore, the increasing demand for genetics, regenerative medicine, and therapy-based diagnostics is fueling the progress of the biotechnology industry. Advances in new technologies and the increasing demand for therapeutic and diagnostic solutions based on biotechnology, DNA sequencing, and recombinant technology are also bolstering the market.

Additionally, investors’ interest in biotech stocks is evident from the SPDR Series Trust SPDR S&P Biotech ETF’s (XBI) 20.9% returns over the past nine months.

Given these encouraging trends, let’s look at the fundamentals of the top Biotech stocks, beginning with the third choice.

Stock #3: BioMarin Pharmaceutical Inc. (BMRN)

BMRN develops and markets therapies for rare and life-threatening diseases such as mucopolysaccharidosis, phenylketonuria, and hemophilia. Its products target enzyme deficiencies and genetic disorders, offering hope to patients with limited treatment options.

BMRN’s trailing-12-month EBIT margin of 7.61% is significantly higher than the industry average of 1.66%. Likewise, the stock’s trailing-12-month EBITDA margin of 11.87% is 101.5% higher than the industry average of 5.89%.

BMRN’s total revenue grew 8.8% year-over-year to $648.80 million in the first quarter that ended March 31, 2024. Its income from operations increased 41.8% year-over-year to $88.46 million. Its non-GAAP net income and EPS increased 20.6% and 18.3% from the prior-year quarter to $139.70 million and $0.71, respectively.

Analysts expect BMRN’s revenue and EPS for the second quarter (ending June 2024) to increase 11.6% and 10.4% year-over-year to $664.36 million and $0.60, respectively. Furthermore, the company surpassed the consensus EPS estimates in three of the trailing four quarters, which is impressive.

Shares of BMRN have gained 9.2% over the past month to close the last trading session at $84.71.

Based on 21 Wall Street analysts offering 12-month price targets for BMRN in the last three months, the average target price is $108.05, indicating a 27.6% change from the last price, with a high forecast of $140 and a low forecast of $72.

BMRN’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

BMRN has an A grade for Sentiment and a B for Value. BMRN is ranked #24 among 348 stocks in the Biotech industry.

Click here to access additional BMRN ratings (Momentum, Growth, Quality, and Stability).

Stock #2: Alnylam Pharmaceuticals, Inc. (ALNY)

ALNY pioneers RNA interference-based therapeutics. Its lineup stars ONPATTRO for hereditary transthyretin-mediated amyloidosis, GIVLAARI for acute hepatic porphyria in adults, and OXLUMO fighting primary hyperoxaluria type 1.

On April 30, 2024, ALNY and Medison Pharma, a global pharma company focused on providing access to highly innovative therapies for patients in international markets, announced a further expansion of their existing partnership in Central & Eastern Europe and Israel to also include selected markets in LATAM and APAC and additional international markets.

This partnership is expected to ensure that ALNY’s commercial therapies are made available across multiple international markets, thus enhancing their income streams.

On April 7, ALNY announced positive results from the KARDIA-2 Phase 2 study, which assessed the effectiveness and safety of a single subcutaneous dose of zilebesiran alongside one of three standard-of-care antihypertensive medications: indapamide, amlodipine, or olmesartan.

Zilebesiran, an investigational RNAi therapeutic, targets liver-expressed angiotensinogen (AGT) and is being developed for hypertension treatment, potentially requiring biannual dosing.

ALNY’s trailing-12-month levered FCF margin of 8.63% is significantly higher than the industry average of 1.24%. Also, its trailing-12-month gross profit margin of 83.95% is 46.9% higher than the industry average of 57.14%.

During the fiscal first quarter that ended March 31, 2024, ALNY’s net product revenues increased 32.1% year-over-year to $365.16 million. Its royalty revenue rose 63.4% from the year-ago value to $10.62 million. As of March 31, 2024, its total current assets stood at $2.99 billion, compared to $2.98 billion as of December 31, 2023.

Analysts predict ALNY’s revenue for the fiscal second quarter ending June 2024 to increase 39.8% year-over-year to $445.48 million. Its EPS for the same quarter is expected to be $49.64. Moreover, the company has an excellent earnings surprise history, surpassing consensus EPS estimates in three of the trailing four quarters.

Over the past three months, ALNY’s stock has gained 6.4% to close the last trading session at $157.40.

The stock has lost marginally intraday to close the last trading session at $40.49. Based on 16 Wall Street analysts offering 12-month price targets for ALNY in the last three months, the average target price is $225, indicating a 43% change from the last price, with a high forecast of $400 and a low forecast of $138.

ALNY’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

ALNY has a B grade for Quality, Sentiment, and Growth. It is ranked #21 in the same industry.

In addition to the POWR Ratings we’ve stated above, we also have ALNY ratings for Momentum, Value, and Stability. Get all ALNY ratings here.

Stock #1: Corcept Therapeutics Incorporated (CORT)

CORT discovers and develops drugs for the treatment of severe endocrinologic, oncologic, metabolic, and neurologic disorders in the United States. It offers Korlym tablets medication for the treatment of hyperglycemia secondary to hypercortisolism in adult patients and those who have type 2 diabetes mellitus or glucose intolerance.

CORT’s trailing-12-month asset turnover ratio of 0.82x is 103.2% higher than the industry average of 0.40x. Similarly, its trailing-12-month EBIT margin and levered FCF margin of 23.29% and 23.66% are considerably higher than the industry averages of 1.66% and 1.24%, respectively.

For the fiscal first quarter that ended March 31, 2024, CORT’s net product revenue and income from operations stood at $146.81 million and $29.50 million, up 39% and 98.6% year-over-year, respectively. For the same quarter, its net income attributable to common stockholders and net income per common share increased 74.1% and 78.6% from the year-ago quarter to $27.51 million and $0.25, respectively.

Street expects CORT’s fiscal 2025 EPS to increase 46.2% year-over-year to $1.35. Its revenue for the quarter ending June 30, 2024, is expected to grow 31.9% year-over-year to $155.22 million. The company surpassed consensus EPS and revenue estimates in each of the trailing four quarters.

CORT has gained 20.4% over the past three months, closing the last trading session at $29.40.

The stock lost marginally intraday to close the last trading session at $40.49. Based on five Wall Street analysts offering 12-month price targets for CORT in the last three months, the average target price is $49.70, indicating a 69.1% change from the last price, with a high forecast of $70.50 and a low forecast of $35.

CORT’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. 

The stock has an A grade for Quality and a B for Value. Within the same industry, CORT is ranked #17 in the same industry.

Click here to access additional ratings of CORT for Stability, Growth, Sentiment, and Momentum.

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ALNY shares were trading at $163.93 per share on Friday afternoon, up $6.53 (+4.15%). Year-to-date, ALNY has declined -14.36%, versus a 14.83% rise in the benchmark S&P 500 index during the same period.

About the Author: Nidhi Agarwal

Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...

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