The biotech industry should thrive on the back of breakthrough developments and increased investment this year. Thus, fundamentally strong biotech stocks Alkermes (ALKS) and Nippon Shinyaku (NPPNY) could be ideal buys. Read more.
Despite economic headwinds, the SPDR S&P Biotech ETF (XBI) added 5.1% over the past month, which indicates investor confidence in the industry. In addition, growing technological progress and regulatory permissiveness in key areas of innovation are expected to drive the development of the biotechnology industry.
Against this backdrop, I think the quality biotech stocks of Alkermes plc (ALKS) and Nippon Shinyaku Co., Ltd. (NPPNI) that have maintained a stable rate of return should be bought now. These stocks have a buy rating on our proprietary rating system.
Biotechnology thrives on technological advances and key market players are constantly launching new products to strengthen their position in the industry. Data Bridge Market Research predicts that the biotechnology market will reach $10.13 trillion by 2030, an increase of CAGR 29%.
Moreover, the pandemic has accelerated the shift towards digitalization, telemedicine and personalized medicine, which are expected to drive the growth of the industry.
The market for personalized medicine and related diagnostics is expected to grow due to the increasing prevalence of rare diseases and advances in understanding the human genome.
The global personalized medicine market is predicted to grow at a rate SGTR 10.9% by 2028 will reach $540.12 billion.
Amid the popular debate about whether the US will enter recession this year, Raj Lala, President and CEO of Evolve Funds, recently remarked that even if that happens, biotech companies “continue to perform well“.
Take a look at the stocks mentioned above:
ALKS, headquartered in Dublin, Ireland, is a biopharmaceutical company that researches, develops and commercializes pharmaceutical products to meet the unmet medical needs of patients in various therapeutic areas in the US, Ireland and abroad.
Its 12-month asset turnover ratio of 0.57x is 64.5% higher than the industry average of 0.35x. His last 12 month gross profit margin 80.48%, 44.6% higher than the industry average of 55.65%.
ALKS’ total revenue for the quarter ended March 31, 2023 was $287.60 million, compared to $278.55 million for the same period the prior year. Non-GAAP net income for the quarter was $2.42 million and non-GAAP earnings per share was $0.01.
ALKS’ revenue is expected to grow 15.3% year on year to $318.39 million in the second fiscal quarter ending June 2023. The company’s earnings per share for the same quarter is expected to be $0.01. In addition, in three of the last four quarters, the stock has outperformed the consensus EPS and revenue guidance, which is impressive.
Shares are up 22.4% over the past six months and closed the last trading session at $28.55.
ALKS Power Ratings reflect its promising prospects. The stock has an overall rating of A, which is a strong buy in our proprietary rating system. PoWR ratings are calculated based on 118 different factors, each of which is optimally weighted.
ALKS is also rated B for height, mood, value, and quality. It ranks first out of 383 stocks in the ranking. biotechnology industry.
To access additional ALKS stability and momentum ratings, Click here.
Nippon Shinyaku Co., Ltd. (NPPNI)
Headquartered in Kyoto, Japan, NPPNY manufactures and sells pharmaceuticals and food products in Japan and abroad. The company operates in the pharmaceutical and functional nutrition segments.
The last 12-month gross margin of 61.12% is 9.8% higher than the industry average of 55.65%. Its past 12-month asset turnover ratio of 0.65x is 85.1% higher than the industry average of 0.35x.
NPPNY’s revenue increased 3.4% year-on-year to 109.92 billion yen ($821.42 million) in the third fiscal quarter ended March 31, 2023. The company’s operating income was 27.99 billion yen ($209.15 million), and the profit to owners came in 22.67 billion yen ($169.44 million).
Analysts expect NPPNY’s revenue to rise 12.6% year on year to $271.50 million in the third fiscal quarter ending March 2023.
Shares rose slightly over the past month and closed the last trading session at $11.30.
NPPNY’s strong fundamentals are reflected in the PoWR ratings. The stock has an overall rating of B, which corresponds to a buy in our own rating system.
NPPNY is also rated B for value, consistency and quality. It ranks 11th in the same industry.
To access additional NPPNY Growth, Sentiment and Momentum ratings, Click here.
What to do next?
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ALKS shares were unchanged in premarket trading on Monday. Since the start of the year, the ALKS has gained 9.26% compared to the benchmark S&P 500’s 9.17% gain over the same period.
About the author: Nidhi Agarwal
Nidhi is passionate about capital markets and asset management, which led her to a career as an investment analyst. She has a bachelor’s degree in finance and marketing and is pursuing a CFA program. Her fundamental approach to stock analysis helps investors identify the best investment opportunities.
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