Fundamentally, the driving catalyst for biotech stocks to buy centers on the possibility of supporting paradigm-shifting medical breakthroughs. For example, a report published by the JAMA Network indicates that experts project the global economic cost of cancers from 2020 to 2050 will be $25.2 trillion (in constant 2017 dollar terms). Therefore, finding a cure would translate to a massive economic boon.
On a related note, society eagerly anticipates these breakthroughs. Therefore, biotech stocks to buy tend to march to their own beat. Sure, broader market pressures will cause any sector to tumble. However, recession or not, people will always search for innovative treatments to vexing conditions and diseases. Thus, while the sector can be volatile, from another perspective, it’s a wise place to put funds to work. Below then are seven biotech stocks to buy.
| BGNE | BeiGene | $258.50 |
| INCY | Incyte | $73.81 |
| BMRN | Biomarin | $99.06 |
| ARGX | argenx | $382.12 |
| UTHR | United Therapeutics | $226.68 |
| TECH | Bio-Techne | $84.98 |
| LEGN | Legend Biotech | $62.50 |
Biotech Stocks to Buy: BeiGene (BGNE)
Billed as a biotechnology specialist seeking to develop therapies that are more accessible to people around the world, BeiGene (NASDAQ:BGNE) presents a feel-good narrative. Operationally, the company focuses on developing drugs for cancer treatment. Presently featuring a market capitalization of $29 billion, BGNE ranks as one of the larger biotech stocks to buy. In the trailing one-year period, shares gained nearly 51% of equity value.
Financially, the company admittedly presents a mixed bag. On the positive front, BeiGene sports an Altman Z-Score of 6.73. This indicates high fiscal stability and low risk of imminent bankruptcy. As well, it enjoys a three-year revenue growth rate of 24.4%, ranking higher than 72.61% of companies listed in the biotech space.
On the other hand, its profit margins sit in negative territory, reflecting significant risk. Plus, the company appears overvalued relative to its pricing of 6.35-times book value.
Nevertheless, Wall Street analysts peg BGNE as a consensus strong buy. Their average price target comes out to $308.04, implying over 15% upside potential.
Biotech Stocks to Buy: Incyte (INCY)
A multinational pharmaceutical company, Incyte (NASDAQ:INCY) develops and manufacturers prescription biopharmaceutical medications in multiple therapeutic areas including oncology, inflammation and autoimmunity. Carrying a market cap of $16.45 billion, INCY also rates as one of the larger players among biotech stocks to buy. However, that didn’t spare it volatility, with INCY shedding over 7% since the Jan. opener.
Still, contrarians will want to take a closer look at Incyte. On the balance sheet, the company features a strong cash-to-debt ratio of 78.13 times, above 74.79% of other biotech stocks to buy. Operationally, Incyte commands a three-year revenue growth rate of 15.2%, above nearly 63% of sector players.
Notably, the market prices INCY at a forward multiple of 18.87. As a discount to projected earnings, the company ranks better than 73.21% of the competition. Lastly, covering analysts peg INCY as a consensus moderate buy. Their average price target lands at $87.46, implying almost 19% upside potential.
Biotech Stocks to Buy: BioMarin Pharmaceutical (BMRN)
Headquartered in San Rafael, California, BioMarin Pharmaceutical (NASDAQ:BMRN) has offices and facilities in the United States, South America, Asia and Europe. According to its public profile, BioMarin’s core business and research is in enzyme replacement therapies. BioMarin was the first company to provide therapeutics for mucopolysaccharidosis type I, by manufacturing laronidase. Thanks to its relevance, BMRN gained over 22% of equity value in the trailing year.
Still, it’s possible that BioMarin can keep delivering for investors. On the balance sheet, the company’s Altman Z-Score pings at 6.9, reflecting very low risk of bankruptcy. Operationally, BioMarin enjoys a three-year book growth rate of 12.5%, outflanking 60.51% of other biotech stocks to buy. Also, its EBITDA growth rate during the same period stands at 99.5%.
About the one major drawback centers on BMRN being overvalued against earnings (both trailing and projected). However, it sports solid profit margins, making it attractive. Moreover, analysts peg BMRN as a consensus moderate buy. Their average price target hits $118.19, implying 20% upside potential.
argenx (ARGX)
Located in the Netherlands, argenx (NASDAQ:ARGX) claims to reach patients through immunology innovation. Specifically, Argenx created an antibody innovation ecosystem where pioneering scientists and antibody engineers work side-by-side to accelerate the discovery of novel targets, disease pathways and differentiated therapeutic antibodies. So far this year, ARGX gained only half a percent. However, in the trailing year, it’s up 17%.
Financially, the company’s main strengths centers on its balance sheet. Featuring a cash-to-debt ratio of 176.45 times, Argenx should be able to ride out some lean cycles. Notably, its Altman Z-Score pings at a stratospherically high 38.27, indicating extremely low risk of imminent bankruptcy.
Operationally, the company currently features a three-year revenue growth rate of 57.4%, beating out 85% of biotech stocks to buy. However, Gurufocus warns ARGX could be a possible value trap. Nevertheless, Argenx may be able to buy time thanks again to its cash position. So, speculators should watch this name.
Plus, analysts peg ARGX as a consensus strong buy. Their average price target stands at $456.72, implying almost 22% upside potential.
United Therapeutics (UTHR)
Headquartered in Silver Spring, Maryland, United Therapeutics (NASDAQ:UTHR) develops novel, life-extending technologies for patients in the areas of lung disease and organ manufacturing. United just ranks on the cusp of large cap status with a market value of almost $11 billion. Unfortunately, since the January opener, UTRH incurred volatility, slipping nearly 17%. Of course, the upshot is that in the past 365 days, it’s up nearly 24%.
As with other biotech stocks to buy, United presents a mixed bag. On the balance sheet, the company sports an Altman Z-Score of 7.76, delivering great fiscal stability. Operationally, the biotech features an okay three-year revenue growth rate of 6.5%. However, on the bottom line, its net margin of 37.56% beats out 94.26% of sector players.
Further, the market prices UTHR at a forward multiple of 11.29. As a discount to projected earnings, United ranks better than 87.5% of rival biotech stocks to buy. Turning to the Street, analysts peg UTHR as a consensus moderate buy. Their average price target comes out to $282.88, implying 24% upside potential.
Bio-Techne (TECH)
Based in Minneapolis, Minnesota, Bio-Techne (NASDAQ:TECH) develops, manufactures and sells life science reagents, instruments and services for the research, diagnostic and bioprocessing markets. Presently, the company carries a market cap of over $13 billion. Since the Jan. opener, TECH gained a modest 2%. However, in the trailing year, it’s down over 18%.
Generally, Bio-Techne offers some intriguing, perhaps enticing fiscal stats. First, on the balance sheet, the company commands an Altman Z-Score of 16.86, reflecting extremely low bankruptcy risk. Operationally, its three-year revenue growth rate pings at 13.6%, outpacing 61.09% of competing biotech stocks to buy. Also, its EBITDA growth rate during the same period comes out to an impressive 22.8%.
As well, Bio-Techne posts consistent profitability. Currently, its trailing-year net margin hits 23.38%, above 88.62% of its peers. Finally, analysts peg TECH as a consensus strong buy. Overall, their average price target lands at $106.13, implying nearly 26% upside potential.
Legend Biotech (LEGN)
Calling Somerset, New Jersey home, Legend Biotech (NASDAQ:LEGN) is a global, commercial-stage biotechnology company developing and manufacturing novel therapies. Currently, it’s one of the smaller of the large biotech stocks to buy, posting a market cap of $8.6 billion. Since the beginning of this year, LEGN gained over 7% of equity value. In the past 365 days, it’s up nearly 37%, an impressive figure.
However, Legend largely banks on speculative interest. One main positive here is that the company’s Altman Z-Score pings at 11.08, indicating low bankruptcy risk. Also, Legend prints a modestly positive three-year revenue growth rate of 8.8%, beating out 55.76% of its peers.
On the other hand, the company’s EBITDA growth rate during the aforementioned period sits at 28.1% below breakeven. Also, its operating and net margins on a trailing-year basis sit well into negative territory.
Nevertheless, for speculators, LEGN may be one of the biotech stocks to buy. And that’s because analysts peg it as a unanimous strong buy (among nine experts). Also, their average price target stands at $72.33, implying over 38% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
