The COVID-19 pandemic highlighted the importance of the biotech industry, and several biotech companies have been contributing to the fight against the COVID-19 pandemic through vaccines and special treatments. Now, the spread of the new Delta variant of the coronavirus is driving continuing investor interest in the industry. This is evidenced by the iShares Biotechnology ETF’s (IBB) 11% returns over the past three months.
Furthermore, government and private funding support for finding cures for other medical challenges, such as cancer or Alzheimers, and the aging population, should drive the industry’s growth significantly. According to a report by Vision Research Reports, the global biotechnology market is expected to grow at a 16.8% CAGR between 2021 – 2030.
Because biotech stocks are generally considered high risk-reward investments, we think it could be wise to bet on quality biotech stocks United Therapeutics Corporation (UTHR), SIGA Technologies, Inc. (SIGA), and Ovid Therapeutics Inc. (OVID). Each stock looks undervalued at its current price level considering the solid growth prospects based on the companies’ continued innovations.
United Therapeutics Corporation (UTHR)
UTHR is a biotechnology company that develops and commercializes products to address the unmet medical needs of patients with chronic and life-threatening diseases. The company has licensing and collaboration agreements with Medtronic, Inc (MDT), Arena Pharmaceuticals, Inc. (ARNA) and MannKind Corporation (MNKD). UTHR is based in Silver Spring, Md. The company announced on June 16 that the U.S. Food and Drug Administration accepted for priority review its New Drug Application for Tyvaso DPI. UTHR’s Chairperson and CEO Martine Rothblatt said, “If approved, Tyvaso DPI will represent yet another path to help us achieve our goal of serving 25,000 patients by the end of 2025.”
UTHR’s revenue increased 6% year-over-year to $379.10 million for fiscal first quarter ended March 31, 2021. Its sales from Unituxin grew 65% year-over-year to $43.90 million. Its non-GAAP earnings increased 2% year-over-year to $162.10 million.
In terms of forward EV/EBIT, UTHR’s 0.24x is 98.8% lower than the 20.71x industry average. The stock’s 1.91x forward non-GAAP P/E is 92.1% lower than the 24.28x industry average.
Analysts expect UTHR’s EPS and revenue to increase 39.4% and 12.2%, respectively, year-over-year to $15 and $1.75 million in 2022. The stock has gained 78.2% over the past nine months to close yesterday’s trading session at $185.78.
It’s no surprise that UTHR has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting. The stock has an A grade for Value, and a B grade for Quality.
SIGA Technologies, Inc. (SIGA)
SIGA in New York City is a commercial-stage pharmaceutical company that is focused on the health security and infectious disease markets in the United States. Its lead product is TPOXX, which is an orally administered antiviral drug for the treatment of human smallpox disease caused by the variola virus.
On June 30, 2021, SIGA announced that it provided TPOXX to Liverpool University Hospitals NHS Foundation Trust for the treatment of a patient confirmed to be infected with monkeypox. Phil Gomez, the company’s CEO said, “It is becoming clear TPOXX will be an important tool to treat these diseases throughout the world, and we are committed to expanding our regulatory approvals and providing access for patients.”
SIGA’s revenue increased 84.6% year-over-year to $4.80 million for fiscal first quarter ended March 31, 2021. Its operating loss decreased 50% year-over-year to $2 million. Its net loss decreased 91% year-over-year to $0.80 million. And the company’s loss per share decreased 81.8% year-over-year to $0.02.
In terms of forward EV/EBIT, SIGA’s 4.39x is 78.8% lower than the 20.71x industry average. The stock’s 7.65x forward non-GAAP P/E is 68.5% lower than the 24.28x industry average.
For its fiscal year 2022, analysts expect SIGA’s EPS and revenue to increase 5.3% and 4.4%, respectively, year-over-year to $0.79 and $124.5 million. The stock has surged 1.6% over the past year to close yesterday’s trading session at $5.79.
SIGA’s POWR Ratings reflect its solid prospects. The company has an overall B rating, which translates to Buy in our proprietary ratings system. It has an A grade for Value and Quality.
Ovid Therapeutics Inc. (OVID)
Biopharmaceutical company OVID develops impactful medicines for patients with neurological disorders. It is developing various drug candidates, including OV101 and OV935. The company has a collaboration agreement with Takeda Pharmaceutical Company Limited (TAK) and a license agreement with H. Lundbeck A/S (HLUYY). OVID is based in New York City.
Jeremy M. Levin, the company’s Chairman and CEO said, “Having closed the agreement with Takeda in March, and with the recent appointment of Dr. Robert Langer as Chair of the Scientific Advisory Board, we are adequately capitalized and have in place a validated world-class leadership team to drive forward our mission to impact rare neurological diseases.”
OVID’s total assets increased 212.7% year-over-year to $237.46 million for its fiscal first quarter, ended March 31, 2021. Its income from operations came in at $176.56 million compared to a $20.29 million operating loss in the prior-year period. Its net income came in at $176.01 million compared to a $20.03 million net loss in the year-ago period. The company’s EPS for the quarter came in at $2.53 compared to a $0.37 loss per share f in the prior-year quarter.
In terms of forward EV/EBIT, OVID’s 0.24x is 98.8% lower than the 20.71x industry average. In terms of forward non-GAAP P/E, the stock’s 1.91x is 92.1% lower than the 24.28x industry average.
The company’s EPS and revenue are expected to be $2.08 and $208.39 million, respectively, in 2021, which represents a 249.6% and 1,551.7% year-over-year rise, respectively. The stock has soared 69.3% year-to-date to close yesterday’s trading session at $3.91.
OVID’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary ratings system. The stock has an A grade for Value, and a B grade for Quality.
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UTHR shares were trading at $184.79 per share on Tuesday afternoon, down $0.99 (-0.53%). Year-to-date, UTHR has gained 21.74%, versus a 17.78% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...
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