The biotech industry is fueled by an increasing number of orphan drug formulations and increasing investment in advanced technologies. Given the industry’s steady growth prospects, investors could consider quality biotech stocks Regeneron Pharmaceuticals, Inc. (REGN), Corcept Therapeutics Incorporated (CORT), and Incyte Corporation (INCY).
The growing foothold of personalized medicine and an increasing number of orphan drug formulations are opening new avenues for biotechnology applications and are driving the influx of emerging and innovative biotechnology companies, further boosting the market revenue. The global biotechnology market is expected to grow at a CAGR of 14% until 2030.
Additionally, the growing adoption of AI technologies by biopharmaceutical companies has reduced the cost of the drug delivery process. Therefore, AI solutions have emerged as a tool for pharmaceutical organizations to enhance their footprint in the industry. The artificial intelligence in biotechnology market share is anticipated to grow at a CAGR of 29.7% until 2032.
Furthermore, the overall cell culture market is forecasted to expand at a CAGR of 11.8% until 2023, amid increasing research and development activities.
Considering these conducive trends, let’s take a look at the fundamentals of the three best Biotech stocks, starting with number 3.
Stock #3: Regeneron Pharmaceuticals, Inc. (REGN)
REGN discovers, invents, develops, manufactures, and commercializes medicines for treating various diseases worldwide.
On August 22, 2023, REGN announced that the Biomedical Advanced Research and Development Authority has entered into an agreement with Regeneron to support clinical development, clinical manufacturing and the regulatory licensure process of a next-generation COVID-19 monoclonal antibody therapy for the prevention of SARS-CoV-2 infection.
The agreement is part of ‘Project NextGen,’ an initiative by the U.S. Department of Health and Human Services (HHS) to advance a pipeline of new, innovative vaccines and therapeutics for COVID-19.
REGN’s trailing-12-month asset turnover ratio of 0.44x is 16.7% higher than the 0.38x industry average. Its trailing-12-month EBITDA margin of 38% is 624.5% higher than the 5.25% industry average.
REGN’s total revenues increased 10.5% year-over-year to $3.16 billion for the fiscal second quarter that ended June 30, 2023. Its non-GAAP net income increased 4.9% year-over-year to $1.18 billion and non-GAAP net income per share increased 4.8% year-over-year to $10.24.
Street expects REGN’s revenue to increase 9.4% year-over-year to $3.21 billion in the fiscal third quarter (ending September 2023). Its EPS is expected to be $11.06 in the same quarter. Additionally, it has topped consensus EPS and revenue estimates in each of the trailing four quarters.
The stock gained 19.8% over the past year to close its last trading session at $824.84.
REGN’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 POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has a B grade in Value and Sentiment. It is ranked #20 out of 359 stocks in the Biotech industry.
Beyond what is stated above, we’ve also rated REGN for Quality, Momentum, Growth, and Stability. Get all REGN ratings here.
Stock #2: Corcept Therapeutics Incorporated (CORT)
CORT engages in discovery and development of drugs for the treatment of severe metabolic, oncologic, endocrine, and neurological disorders in the United States.
CORT’s trailing-12-month EBITDA margin of 23.3% is 343.5% higher than the industry average of 5.25%. Its trailing-12-month asset turnover ratio of 0.84x is 123.5% higher than the industry average of 0.38x.
During the second quarter that ended June 30, 2023, CORT’s net product revenue rose 13.9% year-over-year to $117.72 million. The company’s net income increased marginally year-over-year to $27.53 million. Its net income per common share grew 4.2% from the year-ago value to $0.25.
Analysts expect CORT’s revenue for the fiscal third quarter ending September 2023 to grow 17.2% year-over-year to $119.18 million. Its EPS is expected to be $0.21 in the same quarter.
Shares of CORT have gained 55.8% year-to-date to close the last trading session at $31.64.
It’s no surprise that CORT has an overall rating of B, which equates to Buy in our proprietary rating system.
CORT has an A grade for Quality. It is ranked #11 in the same industry.
In addition to the POWR Ratings highlighted above, one can access CORT’s ratings for Momentum, Growth, Stability, and Sentiment here.
Stock #1: Incyte Corporation (INCY)
INCY is a biopharmaceutical company, engages in the discovery, development, and commercialization of therapeutics for hematology/oncology, and inflammation and autoimmunity areas in the United States, Europe, Japan, and internationally.
INCY’s trailing-12-month EBITDA margin of 14.92% is 184.5% higher than the 5.25% industry average. Its trailing-12-month levered FCF margin of 21.04% is significantly higher than the 0.30% industry average.
In the fiscal second quarter (ended June 30, 2023), INCY’s total revenues increased 4% year-over-year to $954.61 million, while its non-GAAP operating income came in at $262.06 million. The company’s non-GAAP net income came in at $223.03 million. Also, its non-GAAP EPS came in at $0.99.
Analysts expect INCY’s revenue for the third quarter (ending September 30, 2023) to increase 17.5% year-over-year to $967.60 million. Its EPS is expected to increase 78.2% year-over-year to $1.07 in the same quarter.
INCY’s shares have declined 6.2% over the past three months and to close the last trading session at $58.10.
It’s no surprise that INCY has an overall rating of A, which equates to Strong Buy in our proprietary rating system.
It has an A grade for Value and Quality and a B in Sentiment. Within the same industry, it is ranked #7.
In addition to the POWR Ratings we’ve stated above, we also have INCY’s ratings for Growth, Stability, and Momentum. Get all INCY ratings here.
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REGN shares were trading at $825.26 per share on Monday morning, up $0.42 (+0.05%). Year-to-date, REGN has gained 14.38%, versus a 13.52% 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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