The oncology market is playing an inevitable role worldwide with its latest innovation offering solutions for fatal diseases. Also, the rapidly rising R&D activities and surging investments, coupled with the adoption of cutting-edge technologies are propelling the growth and development of the market.
Given the industry's rosy prospects, it could be wise to invest in fundamentally strong biotech stocks Pyxis Oncology, Inc. (PYXS), Immatics N.V. (IMTX), and Jazz Pharmaceuticals plc (JAZZ) poised for major upside.
Incidents of patients being affected by cancer is increasing dramatically and is projected to grow through the middle of the century across the globe. Simultaneously, ecosystem engaged in the discovery, developing, and delivering breakthrough therapies in entirely new areas of science is on steep high levels.
These factors are continuously contributing to the breakthroughs in the oncology market and propelling its prospects. Last year, over 25 novel oncology active substances were unveiled worldwide, and more than 2,000 new oncology clinical trials were set in motion, such as cell and gene therapies, antibody-drug conjugates, multispecific antibodies, and radioligand therapies.
The oncology drugs market is expected to reach a projected revenue of $194.10 billion by 2024 worldwide. In comparison to the world, the US continues its dominance over the world in the segment with oncology drug development and innovation, having numerous breakthrough therapies approved by the FDA and is expected to generate the highest revenue, with $103.90 billion in 2024.
The global oncology drugs market is anticipated to reach $518.25 billion by 2032, exhibiting growth at a notable CAGR of 11.3%. Factors including the rising prevalence of different type of cancer, increasing new drug launches and product approvals, and growing research activities in the field contribute to the market growth.
Given these favorable market trends, let’s look at the fundamentals of the top three Biotech stocks, beginning with the third choice.
Stock #3: Pyxis Oncology, Inc. (PYXS)
PYXS is a clinical stage company engaged in the development of therapeutics to treat cancers. The company’s lead antibody-drug conjugates (ADC) product candidate is PYX-201, an investigational novel ADC consisting of human immunoglobulin G1, in the Phase 1 clinical trial to treat patients with relapsed or refractory solid tumors.
On August 15, PYXS announced that its PYX-201, an ADC that uniquely targets EDB+FN within the tumor stroma which is PYXS’ lead clinical program is being evaluated in an ongoing Phase 1 trial in multiple types of solid tumors. The company expects to announce preliminary data from the Phase 1 trial of PYX-201 in the fall of 2024.
For the six months that ended June 30, 2024, PYXS posted total revenues of $16.15 million, of which its royalty revenues stood at $8.15 million for the same period. The company’s total other income, net came in at $5.08 million for the half year.
In addition, the company’s cash and cash equivalents were $25.07 million as of June 30, 2024, compared to $9.6 million as of December 31, 2023.
Shares of PYXS have increased 79.7% over the past year to close the last trading session at $3.81. Wall Street analysts expect the stock to hit $8 in the near term, indicating a potential upside of 110%.
PYXS' robust growth prospects are reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Sentiment. Within the Biotech industry, PYXS is ranked #90 out of 341 stocks.
Click here to access additional ratings of PYXS for Stability, Growth, Value, Quality, and Momentum.
Stock #2: Immatics N.V. (IMTX)
Headquartered in Tübingen, Germany, IMTX is a clinical-stage biopharmaceutical company which focuses on the research and development of potential T cell redirecting immunotherapies for the treatment of cancer. It is developing targeted immunotherapies with a focus on treating solid tumors through two distinct treatment modalities.
IMTX’s revenue has grown at a CAGR of 33.3% over the past three years. The company’s tangible book value has increased 72.6% over the same timeframe, while its total assets have improved at a CAGR of 42.5%.
IMTX’s revenue from collaboration agreements increased 52.5% from the year-ago value to €49.02 million ($54.77 million) during the six months that ended June 30, 2024. The company’s cash and cash equivalents and total assets came in at €158.14 million ($176.69 million) and €626.97 million ($700.51 million) as of June 30, 2024.
Analysts expect IMTX's revenue for the third quarter (ending September 2024) to increase 161.1% year-over-year to $16.55 million. For the fiscal year 2024, the company’s revenue is expected to grow 35.6% year-over-year to $79.48 million. Also, the company has topped the consensus EPS estimates in all of the trailing four quarters.
IMTX's shares have gained 36.3% over the past nine months to close the last trading session at $11.49. Wall Street analysts expect the stock to hit $17.33 in the near term, indicating a potential upside of 50.8%.
IMTX's sound fundamentals are reflected in its POWR Ratings. The stock has a B grade for Value. Within the Biotech industry, IMTX is ranked #76 among the 341 stocks.
In addition to the POWR Ratings we've stated above, we also have IMTX ratings for Quality, Growth, Momentum, Stability, and Sentiment. Get all IMTX ratings here.
Stock #1: Jazz Pharmaceuticals plc (JAZZ)
JAZZ identifies, develops, and commercializes pharmaceutical products for unmet medical needs internationally. The company provides Xywav, Xyrem, Epidiolex, Zepzelca, Rylaze, Enrylaz, Defitelio, and Vyxeos.
JAZZ’s trailing-12-month gross profit and EBIT margins of 92.60% and 19.84% are 61.3% and 787.6% higher than the respective industry averages of 57.41% and 2.23%. Likewise, the stock’s trailing-12-month levered FCF margin of 27.17% is significantly higher than the industry average of 1.30%.
During the second quarter, which ended June 30, 2024, JAZZ’s total revenues increased 6.9% year-over-year to $1.02 billion. Its income from operations grew 26.5% from the year-ago value to $199.44 million. The company's non-GAAP adjusted net income and EPS came in at $364.73 million and $5.30, reflecting growth of 12.2% and 17.5% year-over-year, respectively.
Furthermore, the company’s cash and cash equivalents and total assets stood at $1.35 billion and $11.36 billion as of June 30, 2024.
According to the company’s full year 2024 financial guidance, JAZZ expects its revenues between $4 billion and $4.10 billion. Its net income is expected to be $1.27 billion - $1.35 billion and $19.20 - $20.30 per share.
Street expects JAZZ’s revenue for the third quarter (ending September 2024) to increase 6.6% year-over-year to $1.04 billion. Its EPS for the same quarter is expected to grow 14.2% year-over-year to $5.53. Also, the company has topped the consensus revenue estimates in three of the four trailing quarters.
JAZZ's stock has soared 3.1% over the past month to close the last trading session at $114.29. Wall Street analysts expect the stock to hit $173.76 in the near term, indicating a potential upside of 52%.
JAZZ's POWR Ratings reflect its robust outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
JAZZ has an A grade for Value and Growth. It also has a B grade for Sentiment, and Quality. It is ranked #4 among the 341 stocks in the same industry.
Click here to access additional JAZZ ratings for Stability and Momentum.
What To Do Next?
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JAZZ shares were trading at $114.61 per share on Tuesday afternoon, up $0.32 (+0.28%). Year-to-date, JAZZ has declined -6.82%, versus a 18.91% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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