Biotech Stock Success: Top 3 Picks for Monthly Gains

The biotechnology sector has been at the forefront of innovation. Over the past five years, the biotech industry grew at a CAGR of 7%, and by 2025, the biotech industry is expected to reach a valuation of $725 billion.

Given the industry’s steady growth prospects, investors could buy biotech stocks Protalix BioTherapeutics, Inc. (PLX), Organogenesis Holdings Inc. (ORGO), and  ANI Pharmaceuticals, Inc. (ANIP) for monthly gains.

The growing foothold of personalized medicine and an increasing number of orphan drug formulations are opening new avenues for biotechnology applications and are driving the influx of emerging and innovative biotechnology companies, further boosting market revenue.

The global biotechnology market is expected to grow at a CAGR of 14% until 2030.

According to a new report titled Global Use of Medicines 2023, the total spending and global demand for medicines will increase over the next five years to approximately $1.9 trillion by 2027. The underlying growth rate of 3-6% in spending will be driven by new drug launches and broader use of recently launched brands despite efforts by payers to constrain their budgets and the impact of lower-cost options.

With these favourable trends in mind, let's delve into the fundamentals of the three best Biotech stocks, beginning with the third choice.

Stock #3: Protalix BioTherapeutics, Inc. (PLX)

PLX is a biopharmaceutical company that engages in the development, production, and commercialization of recombinant therapeutic proteins based on its proprietary ProCellEx plant cell-based protein expression system in the United States, Australia, Canada, Israel, Brazil, Russia, Turkey, and internationally.

PLX’s trailing-12-month asset turnover ratio of 0.88x is 125.2% higher than the industry average of 0.39x, while its trailing-12-month EBITDA margin of 23.16% is 358.1% higher than the industry average of 5.06%.

For the nine months that ended September 30, 2023, PLX’s total revenue stood at $55.01 million, up 41% year-over-year. Its operating income came to $16.08 million, compared to an operating loss of $10.52 million in the year-ago period.

For the same period, its balance of cash and cash equivalents at end of period increased 90.4% from the prior-year period to $20.41 million. As of September 30, 2023, PLX’s total current assets stood at $72.62 million, compared to $44.88 million as of December 31, 2022.

Street expects revenue to be $62.15 million for the fiscal year ending December 2024. Its EPS is expected to grow at 38.1% year-over-year to $0.15 for the same year. The company surpassed consensus revenue and EPS estimates in each of the trailing four quarters.

The stock has declined 5.7% over the past year to close the last trading session at $1.49.

PLX’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

It has an A grade for Value. It is ranked #30 in the 349-stock Biotech industry.

Beyond what is stated above, we’ve also rated PLX for Momentum, Growth, Quality, Stability and Sentiment. Get all PLX ratings here.

Stock #2: Organogenesis Holdings Inc. (ORGO)

ORGO develops, manufactures, and markets solutions for advanced wound care, surgical, and sports medicine sectors. Its clientele includes hospitals, wound care centers, government facilities, ambulatory service centers, and physician offices, served through adept direct sales representatives and independent agencies.

The stock’s trailing-12-month gross profit margin of 76.43% is 33.9% higher than the industry average of 57.08%. Its EBITDA margin of 8.11% is 60.5% higher than the 5.06% industry average.

For the fiscal 2023 third quarter that ended September 30, 2023, ORGO’s income from operations rose 352.5% year-over-year to $8.05 million. Its adjusted EBITDA grew 37.6% from the year-ago value to $15.97 million. Additionally, the company’s adjusted net income increased 4.1% from the prior year’s quarter to $5.30 million, while net income per share stood at $0.02.

The consensus revenue estimate of $457.07 million for the fiscal year ending December 2024 indicates a 3.8% year-over-year rise. Likewise, the consensus EPS estimate of $0.05 for the ongoing year period is estimated to grow 25% from the prior year. Moreover, the company surpassed the consensus EPS estimates in three of four trailing quarters.

Shares of ORGO have gained 70.2% over the past nine months to close the last trading session at $3.49.

It’s no surprise that ORGO has an overall rating of B, which equates to Buy in our proprietary rating system.

ORGO has an A grade for Value and a B in Quality. It is ranked #26 in the same industry.

In addition to the POWR Ratings highlighted above, one can access ORGO’s ratings for Stability, Sentiment, Momentum, and Growth here.

Stock #1: ANI Pharmaceuticals, Inc. (ANIP)

ANIP develops, manufactures, and markets both branded and generic prescription pharmaceuticals. It specializes in controlled substances, oncology products, hormones, steroids, injectables, and various formulations, such as extended-release and combination products.

On January 23, ANIP unveiled the launch of Pentoxifylline Extended-Release (ER) Tablets, the generic counterpart to the Reference Listed Drug (RLD) Trental. Valued at around $19.7 million annually as per IQVIA/IMS Health estimates, the launch positions ANIP to sustain its generics business success in a moderately competitive market.

For the fiscal 2023 third quarter that ended September 30, 2023, ANIP’s net revenues increased 57.3% year-over-year to $131.83 million. Its adjusted EBITDA grew 98.3% from the year-ago value to $36.48 million. Additionally, adjusted net income available to common shareholders and adjusted earnings per share grew 155.3% and 119% from the prior year’s period to $24.27 million and $1.27, respectively.

Analysts expect revenue to increase 50.9% year-over-year to $477.25 million for the fiscal year that ended December 2023. Likewise, the EPS is estimated to grow 227.9% from the prior year to $4.46. Moreover, the company topped the consensus revenue and EPS estimates in all four trailing quarters.

Shares of ANIP have gained 43.7% over the past nine months, closing the last trading session at $54.20.

ANIP’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to Buy in our proprietary rating system.

ANIP has an A grade for Growth and Sentiment and a B in Value. It is ranked #25 in the same industry.

Click here to access the additional ANIP ratings (Momentum, Quality, and Stability).

What To Do Next?

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PLX shares rose $0.11 (+7.38%) in premarket trading Wednesday. Year-to-date, PLX has declined -16.29%, versus a 3.28% rise in the benchmark S&P 500 index during the same period.

Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.

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