Despite rising borrowing costs, slowing aggregate demand, and looming recession fears, the U.S. GDP rose 2.9% annually in the fourth quarter of 2022, beating consensus estimates. This has instilled significant optimism among investors.
Moreover, the biotech industry is expected to thrive despite the uncertain macro backdrop, thanks to the inelastic demand for healthcare products and services. In addition, the Biden Administration’s National Biotechnology and Biomanufacturing Initiative is expected to bolster domestic biotech manufacturing, research, and development.
Furthermore, the global biotechnology instruments market is projected to grow at a CAGR of 10.2% from 2022 to 2030. Investors’ interest in biotech stocks is evident from the SPDR S&P Biotech ETF’s (XBI) 13.8% returns over the past month.
Given this backdrop, investors should keep an eye on quality biotech stocks Amgen Inc. (AMGN), BioNTech SE (BNTX), Exelixis, Inc. (EXEL), and Taisho Pharmaceutical Holdings Co., Ltd. (TAIPY) in 2023.
Amgen Inc. (AMGN)
AMGN discovers, develops, manufactures, and delivers human therapeutics worldwide. It focuses on inflammation, oncology/hematology, bone health, cardiovascular disease, nephrology, and neuroscience areas.
AMGN’s forward EV/EBITDA of 10.22x is 25.6% lower than the industry average of 13.74x. Its forward Price/Cash Flow of 13.65x is 18.4% lower than the industry average of 16.73x.
AMGN’s trailing-12-month gross profit margin of 75.78% is 36.6% higher than the industry average of 55.48%. Its trailing-12-month EBITDA margin of 50.99% is substantially higher than the industry average of 3.73%.
AMGN’s non-GAAP operating income came in at $3.28 billion for the 2022 third quarter, up 7.4% year-over-year. Its non-GAAP net income increased 8.9% year-over-year to $2.53 billion. Its non-GAAP EPS came in at $4.70, representing a 15.2% year-over-year increase.
Analysts expect AMGN’s revenue to increase 3.7% year-over-year to $27.21 billion for the fiscal year 2023. Its EPS is expected to rise 5.7% per annum for the next five years. It surpassed EPS estimates in all four trailing quarters. The stock has gained 13.2% over the past year to close the last trading session at $253.65.
AMGN’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our POWR Rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
AMGN has an A grade for Quality and a B for Value and Stability. AMGN is ranked #9 out of 399 stocks in the Biotech industry. Click here for additional AMGN ratings (Growth, Momentum, and Sentiment).
BioNTech SE (BNTX)
Headquartered in Mainz, Germany, BNTX develops and commercializes immunotherapies for cancer and other infectious diseases.
On January 10, 2023, BNTX agreed to acquire InstaDeep, a leading global technology company in artificial intelligence (AI) and machine learning. This acquisition is expected to help BNTX initiate advanced AI-driven drug research and development in the future.
In terms of forward EV/Sales, BNTX’s 1.23x is 70.1% lower than the industry average of 4.12x. Its forward Price/Sales of 1.96x is 58.9% lower than the industry average of 4.77x.
BNTX’s trailing-12-month gross profit margin of 81.71% is 47.3% higher than the industry average of 55.48%, while its trailing-12-month EBITDA margin of 68.58% is substantially higher than the industry average of 3.73%.
BNTX’s cash and cash equivalents came in at €13.42 billion ($14.60 billion) for the period ended September 30, 2022, compared to €1.69 billion ($1.84 billion) for the period ended December 31 2021. Also, its total current assets came in at €21.27 billion ($23.15 billion) compared to €15.07 billion ($16.40 billion).
BNTX’s revenue and EPS are expected to come in at $10.04 billion and $17.78 for the fiscal year 2023. It surpassed EPS estimates in three of four trailing quarters. Over the past three months, the stock has gained 6% to close the last trading session at $143.66.
BNTX’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, equating to a Buy in our proprietary rating system.
Also, the stock has an A grade for Value and Quality and a B for Sentiment. It is ranked #25 in the same industry. Get BNTX’s additional POWR Ratings for Growth, Momentum, and Stability here.
Exelixis, Inc. (EXEL)
Oncology-based biotech company EXEL focuses on discovering, developing, and commercializing new medicines to treat cancers in the United States.
EXEL’s forward EV/Sales of 2.65x is 35.7% lower than the industry average of 4.12x. Its forward Price/Sales of 3.52x is 26.3% lower than the industry average of 4.77x.
EXEL’s trailing-12-month gross profit margin of 96.65% is 74.2% higher than the industry average of 55.48%. Its trailing-12-month EBITDA margin of 23.38% is 527.6% higher than the industry average of 3.73%.
EXEL’s total revenues came in at $411.74 million for the quarter ended September 30, 2022, up 25.4% year-over-year. Its net income increased 91.6% year-over-year to $73.21 million, while its EPS increased 91.7% year-over-year to $0.23.
Street expects EXEL’s revenue to increase 15% year-over-year to $1.84 billion for the fiscal year 2023. Its EPS is expected to increase by 46% per annum for the next five years. Over the past month, the stock has gained 12.9% to close the last trading session at $17.47.
It’s no surprise that EXEL has an overall B rating, which indicates a Buy in our proprietary rating system.
It has an A grade for Value and a B for Quality. EXEL is ranked #23 in the same industry. To see additional EXEL ratings for Growth, Momentum, Stability, and Sentiment, click here.
Taisho Pharmaceutical Holdings Co., Ltd. (TAIPY)
Based in Tokyo, Japan, TAIPY and its subsidiaries research, develop, manufacture, market, distribute, and sell over-the-counter (OTC) drugs and prescription pharmaceutical products in Japan and internationally. Its segments are the Self-Medication Operation Group and the Prescription Pharmaceutical Operation Group.
TAIPY’s forward EV/Sales of 0.68x is 83.6% lower than the industry average of 4.12x, and its forward Price/Sales of 1.55x is 67.5% lower than the industry average of 4.77x.
TAIPY’s trailing-12-month gross profit margin of 60.74% is 9.5% higher than the industry average of 55.48%. Its trailing-12-month EBITDA margin of 15.65% is 320% higher than the industry average of 3.73%.
For the six months that ended September 30, 2022, TAIPY’s net sales came in at ¥144.52 billion ($1.11 billion), up 11% year-over-year. Its gross profit increased 9.9% year-over-year to ¥86.33 billion ($663.93 million). Also, its profit came in at ¥11.99 billion ($92.21 million), representing an increase of 203.7% year-over-year.
TAIPY’s revenue is expected to increase substantially year-over-year to $2.21 billion for the fiscal year ending March 2023. Over the past three months, the stock has gained 18.4% to close the last trading session at $10.42.
TAIPY has an overall A grade, translating to a Strong Buy rating in our POWR Ratings system.
It has a B grade for Growth, Value, and Stability. It is ranked #7 in the same industry. Click here for additional POWR Ratings for TAIPY for Momentum, Sentiment, and Quality.
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AMGN shares rose $0.01 (0.00%) in premarket trading Monday. Year-to-date, AMGN has declined -3.42%, versus a 6.08% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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