The biotechnology market is expanding considerably due to government support and increased demand in healthcare and agriculture. Advancements in stem cell technology, DNA fingerprinting, and genetic engineering are further driving market growth.
So, investors could consider investing in top biotech stocks BioMarin Pharmaceutical Inc. (BMRN), ANI Pharmaceuticals, Inc. (ANIP), and Genmab A/S (GMAB), gaining momentum and attracting interest.
The biotech industry outlook for 2024 is upbeat. Increasing mergers and acquisitions (M&A) and licensing activity, backed by improved public equity markets and ample cash reserves in large pharmaceutical companies and venture capital funds, suggests a potential boost in dealmaking and value creation.
Besides, U.S. FDA approvals surged by nearly 50% in 2023 compared to 2022, signaling a potential rebound for the biotech industry. Analysts anticipate increased investment in biotech firms following the uptick in novel drug approvals, though concerns about government scrutiny and high interest rates linger.
Moreover, this year, the biotech industry expects significant growth in targeted protein degradation research and anticipates M&A deals to reach $225 billion to $275 billion. Meanwhile, AI continues to drive innovations in drug discovery and treatment repurposing, leading to a more precise use of AI in biotech.
Further, the rising demand for AI-driven solutions in drug discovery, accelerated by the pandemic, is reshaping the pharmaceutical industry. The global AI in drug discovery market is expected to expand at a CAGR of 40.2% to reach $4.90 billion by 2028.
Considering these conducive trends, let’s examine the fundamentals of the three Biotech stock picks, beginning with the third choice.
Stock #3: BioMarin Pharmaceutical Inc. (BMRN)
BMRN develops and markets therapies for rare and life-threatening diseases such as mucopolysaccharidosis, phenylketonuria, and hemophilia. Its products target enzyme deficiencies and genetic disorders, offering hope to patients with limited treatment options.
BMRN’s revenue has grown at a CAGR of 9.2% over the past three years. Over the same period, the company’s EBITDA has increased at a CAGR of 174.2%.
BMRN’s total revenue grew 20.2% year-over-year to $646.21 million in the fourth quarter that ended December 31, 2023. It’s income from operations was $14.22 million, compared to the year-ago quarter’s loss from operations of $24.50 million. Its non-GAAP net income and EPS increased 50.4% and 48.5% from the prior-year quarter to $94.90 million and $0.49, respectively.
For the fiscal year 2024, BMRN forecasts total revenues between $2.70 billion and $2.80 billion, alongside a non-GAAP EPS ranging from $2.60 to $2.80.
Street expects BMRN’s revenue and EPS to grow 14.4% and 36.7% year-over-year to $2.77 billion and $2.84 for the fiscal year ending December 2024, respectively. The company surpassed the revenue and EPS estimates in three of the trailing four quarters, which is promising.
BMRN’s shares have surged 4.6% over the past nine months and 3.5% over the past month to close the last trading session at $88.98. Also, it gained 2% intraday. It is currently trading above its 50-day moving average of $87.38, indicating an uptrend.
BMRN’s POWR Ratings reflect this sound outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted optimally.
The stock has a B grade for Growth and Value. In the Biotech industry, BMRN is ranked #18 among 360 stocks.
To access additional ratings for BMRN’s Momentum, Stability, Sentiment, and Quality, click here.
Stock #2: ANI Pharmaceuticals, Inc. (ANIP)
ANIP is a biopharmaceutical company that develops, manufactures, and markets prescription pharmaceuticals, including controlled substances, oncology products, and more. The company also provides contract development and manufacturing services and distributes products through various channels.
On April 9, 2024, ANIP launched Baclofen Oral Suspension, a generic version of Fleqsuvy®. With U.S. annual sales for Baclofen Oral Suspension totaling approximately $39 million, this move reflects ANIP's entry into a rapidly growing limited-competition market.
ANIP’s revenue has grown at a CAGR of 19.3% over the past five years. Over the same period, the company’s EBITDA has increased at a CAGR of 9.6%, and its net income and levered FCF have grown at CAGRs of 3.9% and 19.2%, respectively.
During the fourth quarter, which ended December 31, 2023, ANIP’s net revenues rose 39.7% year-over-year to $131.65 million. Its operating income amounted to $6.73 million, up 269.6% from the previous-year quarter. Also, non-GAAP net income available to common shareholders and EPS grew 54.3% and 31.6% from the prior-year quarter to $19.20 million and $1, respectively.
The company projects net revenue to be between $520 million and $542 million, adjusted EBITDA ranging from $135 million to $145 million, and adjusted EPS anticipated to be between $4.26 and $4.67. In addition, its net revenue for Cortrophin Gel is estimated to be between $170 million and $180 million.
Analysts expect ANIP’s revenue to grow 17.3% year-over-year to $125.27 million for the first quarter that ended March 2024. Its EPS for the same period is expected to be $0.98. The company surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
Shares of ANIP surged 75.7% over the past year and 28.9% over the past nine months to close the last trading session at $67.05. It is currently trading above its 50-day and 200-day moving averages of $62.95 and $57.89, respectively.
ANIP’s POWR Ratings reflect its strong prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
ANIP has an A grade for Growth and a B for Value and Sentiment. Within the same industry, it is ranked #16.
Click here for ANIP’s additional POWR Ratings for Momentum, Stability, and Quality ratings.
Stock #1: Genmab A/S (GMAB)
Headquartered in Copenhagen, Denmark, GMAB develops antibody therapeutics primarily in Denmark, with offerings including DARZALEX for cancer treatment, teprotumumab for thyroid eye disease, and Amivantamab for advanced gastric or esophageal cancer.
On March 15, 2024, GMAB launched a share buy-back program from March 18, 2024, to December 16, 2024, allowing the repurchase of up to DKK3.50 billion ($509.53 million) worth of shares through Morgan Stanley Europe SE, per regulatory standards and market conditions, with weekly transaction announcements scheduled.
GMAB’s revenue has grown at a CAGR of 40.4% over the past five years. Over the same period, the company’s EBITDA has increased at a CAGR of 31%, and its net income and EPS have grown at CAGRs of 24.2% and 22.7%, respectively.
In the fiscal year that ended December 31, 2023, GMAB’s revenue increased 13.6% year-over-year to DKK16.47 billion ($2.40 billion). Its operating profit was DKK5.32 billion ($774.64 million), and the company reported a net profit of DKK4.35 billion ($633.57 million).
As of December 31, 2023, its total assets amounted to DKK35.29 billion ($5.14 billion), compared to DKK30.12 billion ($4.38 billion) as of December 31, 2022.
For the fiscal year 2024, the company expects revenue between DKK18.70 billion ($2.72 billion) and DKK20.50 billion ($2.98 billion), with gross profit ranging from DKK18 billion ($2.62 billion) and DKK19.50 billion ($2.84 billion). Also, operating profit is forecasted to be between DKK4.60 billion ($669.67 million) and DKK7.10 billion ($1.03 billion).
For the fiscal year ending December 2024, analysts expect GMAB’s revenue and EPS to increase 20.5% and 22.4% year-over-year to $2.86 billion and $1.16, respectively. The company surpassed the revenue estimates in each of the trailing four quarters.
The stock soared marginally intraday to close the last trading session at $29.97. It is currently trading above its 50-day moving average of $29.12.
GMAB’s POWR Ratings reflect its robust prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
GMAB has a B grade for Value and Quality. Within the same industry, it is ranked #11.
Beyond the POWR Ratings highlighted above, we have also rated GMAB for Growth, Momentum, Stability, and Sentiment. Get all GMAB ratings here.
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GMAB shares were trading at $29.63 per share on Wednesday morning, down $0.34 (-1.13%). Year-to-date, GMAB has declined -6.94%, versus a 8.25% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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