The biotech industry has thrived amid the pandemic. Moreover, the National Biotechnology and Biomanufacturing Initiative of the Biden-Harris Administration is expected to fuel the industry’s future expansion.
Additionally, biotechnologies are becoming essential for meeting all nations’ basic needs, such as providing for their populations’ food, fuel, and medical conditions, safeguarding the environment, and producing the materials needed to maintain society.
Also, amid new evolving strains of the Omicron variant, the biotech industry remains under focus. Investors’ interest in biotech stocks is evident from the SPDR Series Trust SPDR S&P Biotech ETF (XBI) 11.7% gains over three months and 7.4% gains over the past six months.
Furthermore, according to Precedence Research, the global biotechnology market is expected to grow at a CAGR of 8.7% from 2022-2030.
Given the backdrop, fundamentally sound biotech stocks, Gilead Sciences, Inc. (GILD) and Corcept Therapeutics Incorporated (CORT), might be ideal buys now. These stocks are currently trading under $100.
Gilead Sciences, Inc. (GILD)
Biopharmaceutical company GILD discovers, develops, and commercializes medicines in the areas of unmet medical need in the United States, Europe, and internationally for over three decades.
On January 3, 2022, GILD announced that the European Medicines Agency (EMA) had validated the Marketing Authorization Application (MAA) for Trodelvy to treat adult patients with pretreated HR+/HER2- metastatic breast cancer. This is expected to significantly increase patient access to Trodelvy across the EU and add to GILD’s revenues.
In terms of forward EV/EBITDA, GILD is trading at 9.07x, 32.6% lower than the industry average of 13.46x. Its forward EV/EBIT of 10.29x is 41.9% lower than the industry average of 17.71x.
GILD’s trailing-12-month gross profit margin of 79.22% is 43.4% higher than the 55.24% industry average. Its trailing-12-month net income margin of 12.29% is significantly higher than the negative 5.84% industry average.
GILD’s trodelvy’s sales came in at $180 million for the third quarter that ended September 30, 2022, up 78.2% year-over-year. The company’s current liabilities came in at $10.42 billion for the period ended September 30, 2022, compared to $11.61 billion for the period ended December 31, 2021. Also, its total liabilities and equity came in at $62.56 billion, compared to $67.95 billion for the same period.
GILD’s EPS is expected to increase marginally per annum for the next five years. It surpassed EPS estimates in three of the four trailing quarters. Over the past nine months, the stock has gained 39.1% to close the last trading session at $85.72.
GILD’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
GILD has an A grade for Value and a B for Sentiment and Quality. Within the Biotech industry, it is ranked #4 out of 396 stocks.
Beyond what is stated above, we’ve also rated GILD for Growth, Momentum, and Stability. Get all GILD ratings here.
Corcept Therapeutics Incorporated (CORT)
CORT is a biotechnology company focused on drug development to help patients manage unstable cortisol levels, the body’s stress hormone.
In terms of forward EV/EBITDA, CORT is currently trading at 12.22x, 9.2% lower than the industry average of 13.46x. Its forward EV/EBIT of 13.95x is 21.2% lower than the industry average of 17.71x.
CORT’s trailing-12-month gross profit margin of 98.68% is 78.6% higher than the 55.24% industry average. Its trailing-12-month net income margin of 29.39% is significantly higher than the negative 5.84% industry average.
CORT’s revenues came in at $101.73 million for the third quarter that ended September 30, 2022, up 5.8% year-over-year. Its net profit came in at $34.55 million, up 13.4% year-over-year, while its EPS came in at $0.30, up 25% year-over-year.
Street expects CORT’s revenue to increase by 9.8% year-over-year to $443.51 million in 2023. Its EPS is expected to grow 12.6% year-over-year to $1.07 in 2023. It surpassed EPS estimates in three out of four trailing quarters. The stock has gained 16% over the past year to close the last trading session at $21.86.
It’s no surprise that CORT has an overall A rating, equating to a Strong Buy in our POWR Ratings system. It has an A grade for Value and Quality.
CORT is ranked #10 in the same industry. Click here for the additional POWR Ratings for CORT (Stability, Growth, Sentiment, and Momentum).
GILD shares were trading at $85.69 per share on Friday afternoon, down $0.03 (-0.03%). Year-to-date, GILD has declined -0.19%, versus a 3.89% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master’s degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More…
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