The COVID-19 pandemic highlighted the limitations of the global healthcare sector. Since its advent, governments worldwide have been investing heavily in their nations’ healthcare industries to mitigate the public health crisis. Thus, the popularity of biotechnology stocks with investors has increased dramatically since March 2020, given the sector’s key role in ameliorating the virus’ effects.
Scientific advances in biotechnology have created new ways of treating and preventing many diseases. The pandemic drove biotechnology companies to expeditiously develop treatments and vaccines for the COVID-19 virus. And with the virus continuing to mutate into newer variants, biotechnology companies will again be in focus as the demand for booster doses and therapies grows. According to a Qualiket Research report, the global biotechnology market is expected to grow at a 15.5% CAGR through 2027. And biotech companies are also providing products and technologies to combat other debilitating and rare diseases.
Given this backdrop, we think it could be wise to add fundamentally strong biotech stocks Vertex Pharmaceuticals Incorporated (VRTX), BioNTech SE (BNTX), and Incyte Corporation (INCY) to one’s watchlist.
Vertex Pharmaceuticals Incorporated (VRTX)
Boston-based VRTX is a biotechnology company that focuses on developing and commercializing therapy to treat cystic fibrosis (CF) and advancing its research and development programs in other areas. The company’s marketed medicines include TRIKAFTA/KAFTRIO, SYMDEKO/SYMKEVI, ORKAMBI, and KALYDECO. VRTX, in partnership with Emergent Biosolutions, Inc. (EBS), announced the development of an oral vaccine to fight COVID-19 in 2020.
On Jan. 11, 2022, VRTX announced that the European Commission had granted approval for the label extension of KAFTRIO (ivacaftor/tezacaftor/elexacaftor) in a combination regimen with ivacaftor for treating patients with cystic fibrosis in the 6 – 11 age group who have at least one F508del mutation in the cystic fibrosis transmembrane conductance regulator gene.
VRTX’s product revenues increased 29% year-over-year to $1.98 billion in the third quarter, ended Sept. 30, 2021. The company’s non-GAAP net income increased 33% year-over-year to $926 million. Also, its non-GAAP EPS came in at $3.56, representing a 35% increase year-over-year.
Analysts expect VRTX’s EPS and revenue for the quarter ending Dec. 31, 2021, to increase 31.1% and 23%, respectively, year-over-year to $3.29 and $2 billion. It surpassed the Street’s EPS estimates in three of the trailing four quarters. And over the past three months, the stock has gained 23.2% in price to close the last trading session at $228.61.
VRTX’s strong fundamentals are reflected in its POWR Ratings. It has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has an A grade for Quality and a B grade for Growth, Value, and Sentiment. It is ranked first among the 461 stocks in the Biotech industry. Click here to see the additional ratings of VRTX for Momentum and Stability.
BioNTech SE (BNTX)
Headquartered in Mainz, Germany, BNTX is a clinical-stage biotechnology company that focuses on patient-specific immunotherapies for the treatment of cancer and other serious diseases. The company develops a broad product pipeline using various scientific approaches and technology platforms, including individualized mRNA-based product candidates, targeted cancer antibodies, checkpoint immunomodulators, and small molecules. On Dec. 8, 2021, BNTX and Pfizer Inc. (PFE) announced that preliminary laboratory studies suggested that three doses of the Pfizer-BioNTech COVID-19 vaccine neutralize the omicron variant, while two doses significantly reduce neutralization titers.
On Jan. 11, 2022, BNTX announced that it had developed a new computational method in collaboration with InstaDeep Ltd., which analyzes worldwide available sequencing data and predicts high-risk variants of SARS-CoV-2. The early warning System combines spike protein structural modeling with artificial intelligence to detect and monitor high-risk variants by identifying greater than 90% of WHO-designated variants an average of two months before receiving the official designation.
For its fiscal third quarter, ended Sept. 30, 2021, BNTX’s total revenues increased 8,918.2% year-over-year to €6.08 billion ($6.89 billion). The company’s net profit came in at €3.21 billion ($3.64 billion), versus a €210 million ($238.10 million) net loss. Its EPS came in at €12.35, compared to a €0.88 loss per share.
For its fiscal 2021, BNTX’s EPS and revenue is expected to increase 59,542.9% and 3,249.2%, respectively, year-over-year to $41.75 and $19.76 billion It surpassed consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 51.6% in price to close the last trading session at $156.53.
BNTX’s POWR Ratings reflect this promising outlook. The stock has an overall B rating. which equates to Buy in our proprietary rating system.
Incyte Corporation (INCY)
INCY is a Wilmington, Del.-based biopharmaceutical company that is focused on discovering, developing, and commercializing therapeutics. The company operates in the Hematology/oncology therapeutic area, which comprises Myeloproliferative Neoplasms and Graft-Versus-Host disease, and the Inflammation and Autoimmunity therapeutic area, which includes its dermatology commercial franchise. On Jan. 14, 2022, the WHO strongly recommended the use of Baricitinib, which has been developed jointly by INCY and Eli Lilly and Company (LLY), for patients with severe or critical COVID-19. Data suggests that the use of the drug helps in preventing deaths from COVID-19.
On Oct. 28, 2021, INCY announced the validation of its European Marketing Authorization Application (MAA) for ruxolitinib cream, which is a topical JAK inhibitor used in the treatment of non-segmental vitiligo with facial involvement in adolescents and adults. MAA’s validation by the European Medicines Agency (EMA) indicates that the submission is ready to enter the formal review process.
INCY’s total revenues increased 31% year-over-year to $812.98 million for the third quarter, ended Sept.30, 2021. The company’s non-GAAP net income increased 423% year-over-year to $261.82 million. And its non-GAAP EPS came in at $1.18, representing an increase of 413% year-over-year.
Analysts expect INCY’s EPS for its fiscal year 2021 to increase 933.3% year-over-year to $3.5. Its revenue for fiscal 2022 is expected to increase 17.7% year-over-year to $3.45 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 13.8% in price over the past three months to close the last trading session at $74.76.
INCY’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which equates to a Buy in our proprietary rating system.
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VRTX shares were trading at $228.08 per share on Friday afternoon, down $0.53 (-0.23%). Year-to-date, VRTX has gained 3.86%, versus a -7.72% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...
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