Last month, Harmony Biosciences Holdings Inc. (HRMY - Get Rating), a dedicated pharmaceutical firm specializing in innovative therapies for rare neurological diseases, revealed robust preliminary, unaudited net product revenues of $201 million for the fourth quarter of fiscal 2024 and $714 million for the full year.

HRMY’s impressive performance paves the way for a dynamic 2025, packed with value-driving milestones each quarter. With a sharp focus on maximizing its neuroscience pipeline, the company enters the year with unstoppable momentum, charting a clear course toward sustained growth and a potential $3 billion in future net revenue.

That said, shares of HRMY have surged 17.8% over the past three months and 24.7% over the past nine months, closing the last trading session at $39.36.

So, let us discuss the factors that could affect the stock’s growth trajectory.

Stable Historical Growth

HRMY’s prospects are quite apparent from its consistent growth across key financial metrics. Its revenue and EBITDA grew at a CAGR of 36.1% and 32.9%, respectively. The company’s operation income and total assets also expanded at a CAGR of 38% and 33.4%, respectively.

Moreover, net income and EPS expanded at a CAGR of 119% and 120.7%, respectively, over the same period.

Sound Financials

During the fiscal third quarter that ended September 30, 2024, HRMY’s net product revenue increased 16.1% year-over-year to $186.04 million. Its operating income amounted to $61.71 million.

Moreover, the company’s non-GAAP adjusted net income and non-GAAP adjusted net income per share rose 1.4% and 6.2% from the prior year’s quarter to $59.60 million and $1.03, respectively. As of September 30, 2024, HRMY’s cash and cash equivalents amounted to $387.37 million, compared to $311.66 million on December 31, 2023.

Optimistic Analyst Estimates

Analysts expect HRMY’s revenue and EPS for the fiscal 2024 fourth quarter that ended December 2024 to increase 19.7% and 60.3% year-over-year to $201.51 million and $0.72, respectively. In addition, the company exceeded the consensus revenue estimates in each of the four trailing quarters, which is impressive.

For the fiscal 2025 first quarter ending in March, HRMY’s revenue and EPS are expected to rise 18.3% and 1.3% from the prior year’s period to $182.92 million and $0.68, respectively.

Robust Profitability

HRMY’s trailing-12-month gross profit margin of 78.65% is 35.1% higher than the industry average of 58.20%. Its trailing-12-month EBITDA margin stands at 29.27%, 406.7% higher than the industry average of 5.78%.

In addition, the company boasts a trailing-12-month levered FCF margin of 24.73%, which is 926.1% higher than the sector average of 2.41%. Also, the stock’s trailing-12-month asset turnover ratio of 0.80x is 93.7% higher than the industry average of 0.41x.

Discounted Valuation

HRMY is currently trading at a forward non-GAAP P/E of 11.64x, which is 43.6% lower than the industry average of 20.65x. Moreover, the stock’s forward EV/EBIT multiple stands at 9.82, 41.3% lower than the industry average of 16.74x.

Additionally, it has a forward Price/Sales multiple of 3.14, which is 14.6% lower than the industry average of 3.68x. This indicates that HRMY is undervalued compared to its peers, offering potential upside for investors.

POWR Ratings Reflects Optimism

HRMY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

HRMY has an A grade for Value, driven by its discounted valuation metrics relative to the industry average. It also earns an A for Quality, in line with its higher-than-average profitability metrics.

Within the Biotech industry, HRMY is ranked #9 out of 336 stocks. Beyond what is stated above, we have also given HRMY grades for Momentum, Sentiment, Growth, and Stability. Get all HRMY ratings here.

Bottom Line

HRMY has successfully drawn out an impressive development plan for the ongoing fiscal year that includes potential approvals, increased revenue growth, and positive clinical trial data. The company expects up to six phase 3 clinical development programs by the end of 2025 and the current pipeline to generate billions in net revenue.

Additionally, HRMY anticipates delivering at least one new product or indication approval every year for the next four years. With such a clear course toward sustained growth, the company is well-poised to deliver impressive results in the year to come. Given HRMY’s solid financials, attractive valuation, and high profitability, now could be the ideal time to invest in the stock.

How Does Harmony Biosciences Holdings, Inc. (HRMY) Stack Up Against Its Peers?

Although HRMY’s near-term outlook appears sound, it may be worthwhile to explore its industry peers, who also exhibit strong POWR Ratings. So, consider these A (Strong Buy) rated stocks from the Biotech industry:

Gilead Sciences Inc. (GILD - Get Rating)

Genmab A/S (GMAB - Get Rating)

Jazz Pharmaceuticals plc (JAZZ - Get Rating)

To explore more A or B-rated Biotech stocks, click here.

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HRMY shares were unchanged in premarket trading Thursday. Year-to-date, HRMY has gained 14.39%, versus a 3.10% rise in the benchmark S&P 500 index during the same period.

About the Author: Aritra_Gangopadhyay

Aritra is a financial journalist dedicated to breaking down complex financial topics into simple, actionable insights. Holding a Master’s degree in Economics, he uses his analytical expertise to help investors uncover unique opportunities for long-term success. More...

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