Despite macroeconomic uncertainties, the biotech industry has performed relatively well over the last year, owing to breakthrough advancements and inelastic demand for healthcare products and services. So, investors could consider buying shares of Amgen Inc. (AMGN) and Biogen Inc. (BIIB) now.
Moreover, the industry is benefiting from government efforts. The Biden administration announced an investment of over $2 billion in biotech and biomanufacturing efforts last year, with the Department of Defense providing $1 billion, particularly for manufacturing facilities in the United States.
The Biden Administration’s National Biotechnology and Biomanufacturing Initiative is expected to boost the industry’s growth.
Furthermore, according to Data Bridge Market Research, the biotechnology market is expected to grow at a CAGR of 29% until 2030.
Healthcare has historically outperformed during market downturns, providing a safe haven for investors seeking portfolio stability. Investors’ interest in biotech stocks is evident from the iShares Biotechnology ETF’s (IBB) 10.4% gains over nine months.
Lets discuss the stocks mentioned above in detail.
Amgen Inc. (AMGN)
AMGN discovers, develops, manufactures, and delivers human therapeutics worldwide. It focuses on inflammation, oncology/hematology, bone health, cardiovascular disease, nephrology, and neuroscience areas.
On February 2, 2023, AMGN and AstraZeneca’s (AZN) TEZSPIRE was approved in the US for self-administration in a pre-filled, single-use pen for patients aged 12 years and older with severe asthma.
TEZSPIRE is the only biologic licenced for severe asthma that does not have any phenotypic or biomarker restrictions in its approved label.1. This should assist AZN in meeting unmet needs for asthma patients.
In terms of forward EV/EBITDA multiple, AMGN is trading at 9.52 is 26.6% lower than the industry average of 12.97. In addition, its’s forward EV/EBIT of 11.74 is 25.8% lower than the industry average of 15.82.
AMGN has paid dividends for 11 consecutive years. Over the last three years, AMGN’s dividend payouts have grown at 10.1% CAGR. While AMGN’s four-year average dividend yield is 2.89%, Its forward annual dividend of $8.52 translates to a 3.74% yield.
AMGN’s trailing-12-month EBITDA margin of 51.23% is substantially higher than the industry average of 3.39%. Its trailing-12-month ROCE is 126.47% compared to the industry average of negative 39.86%.
AMGN’s total revenues came in at $26.32 billion for the fourth quarter that ended December 31, 2022, up marginally year-over-year. Its non-GAAP operating income increased 21.3% year-over-year to $12.76 billion.
The company’s non-GAAP net income increased 20% year-over-year to $9.57 billion. Also, its non-GAAP EPS came in at $17.69, representing an increase of 27.1% year-over-year.
AMGN’s revenue is expected to increase 4.7% year-over-year to $28.01 billion in 2024. Its EPS is expected to increase 5.9% year-over-year to $18.82 in 2024. It surpassed EPS estimates in three of the four trailing quarters. Over the past year, the stock has gained marginally to close the last trading session at $227.87.
AMGN’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall A rating equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
AMGN has an A grade for Quality and a B grade for Stability and Value. Within the Biotech industry, it is ranked #8 out of 392 stocks. Beyond what is stated above, we’ve also rated AMGN for Sentiment, Growth, and Momentum. Get all the AMGN ratings here.
Biogen Inc. (BIIB)
BIIB discovers, develops, manufactures, and delivers therapies for treating neurological and neurodegenerative diseases.
In terms of forward EV/EBITDA multiple, BIIB is trading at 11.34 is 12.6% lower than the industry average of 12.97. In addition, BIIB’s forward EV/EBIT of 13.68x is 13.6% lower than the industry average of 15.82x.
BIIB’s trailing-12-month EBITDA margin of 34.73% is 924.9% higher than the industry average of 3.39%. Its trailing-12-month ROCE is 25.08% compares to the industry average of negative 39.86%.
For the fourth quarter that ended December 31 2022, 1, 2022, BIIB’s total cost and expenses decreased 16.7% year-over-year to $1.94 billion. Its total non-GAAP net income increased 17.3% year-over-year to $587.20 million. Also, its non-GAAP EPS came in at $4.05, representing a 19.5% increase from the prior-year quarter.
Analysts expect BIIB’s EPS to increase 5.7% year-over-year to $16.48 in 2024. It surpassed EPS estimates in three of four trailing quarters. The stock has gained 29.9% over the past nine months to close the last trading session at $256.56.
BIIB has an overall A rating, equating to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Value and a B for Growth and Quality. BIIB is ranked #4 in the same industry. Click here for the additional POWR Ratings for BIIB (Momentum, Stability, and Sentiment)
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AMGN shares were trading at $235.04 per share on Monday morning, up $7.17 (+3.15%). Year-to-date, AMGN has declined -9.72%, versus a 0.68% 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. More...
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|AZN||Get Rating||Get Rating||Get Rating|