The biotechnology sector is huge and growing. Grand View Research forecasts that the industry will reach $3.88 trillion by 2030, growing at a compound annual growth rate of 14%. Despite the massive amount of revenue being generated, most biotech companies remain small and medium-sized enterprises.
Many of the companies operating in the space are start-ups. Yet they are performing cutting-edge research and developing life-saving innovations that are in high demand. This presents an opportunity for investors, especially since many biotech stocks have either declined over the last year or have been trading sideways.
While stocks related to artificial intelligence reach dizzying heights and overblown valuations, affordable biotech stocks are plentiful, offering enticing entry points to investors. With the global biotech industry continuing to grow, we offer this buy alert: three biotech stock opportunities with super attractive entry points.
Regeneron Pharmaceuticals (REGN)
Now looks like an ideal time to take a position in Regeneron Pharmaceuticals (NASDAQ:REGN). The company well-known for developing a Covid-19 treatment during the pandemic, Regeneron’s stock has pulled back in recent months.
This year, REGN stock is up only 3% and the shares are currently trading 12% below their 52-week high and may be trading at a 33% discount. The price-earnings ratio of 20 looks reasonable for a company of Regeneron’s size and cheap compared to many of its biotech peers.
The main reason for the pullback in REGN stock, other than declining sales of its Covid-19 antibody treatment, was the U.S. Food and Drug Administration’s (FDA) recent rejection of its application for a higher dose of its eye medication Eylea.
Many analysts saw the higher-dose Eylea as a potential blockbuster medication for the company and a major catalyst for future sales. For its part, Regeneron says it plans to work with the FDA to address its concerns. Long-term, REGN stock should be fine. The share price is up nearly 90% over the last five years.
Biogen (BIIB)
Biogen (NASDAQ:BIIB) is a biotech company that specializes in treatments for neurological diseases such as Multiple Sclerosis and Alzheimer’s. The company was founded in 1978 by professors from Harvard University and the Massachusetts Institute of Technology (MIT), with some of its founders having since been awarded Nobel Prizes in Chemistry and Medicine.
While Biogen has been around for a long time, its stock looks ripe for the picking currently with the share price flat on the year (down 0.89%) and trading at just 14 times future earnings.
Biogen recently announced that it is acquiring Reata Pharmaceuticals (NASDAQ:RETA) for $7.3 billion, a move the company says will further bolster its medications to treat neurological diseases. RETA stock surged 54% on news that Biogen is acquiring it.
However, BIIB stock barely moved on the news, inching up only 0.9%. Reports of the acquisition came as Biogen also announced that it is cutting 1,000 jobs to reduce operating expenses. The acquisition and job cuts have given investors pause. But it’s also created a buying opportunity.
Gilead Sciences (GILD)
Biopharmaceutical company Gilead Sciences (NASDAQ:GILD) has been a laggard for some time now. This year, GILD stock is down 11%, bringing its five-year performance to a decline of 3%. That’s not great. However, there are reasons to consider Gilead Sciences, which specializes in developing antiviral drugs to treat illnesses ranging from HIV and influenza to Hepatitis B and Hepatitis C. These include a modest price-earnings (P/E) ratio of 17 and a dividend yield of 3.94%, which equates to a quarterly payment of 75 cents a share.
Other reasons to consider taking a position in GILD stock include its blockbuster HIV medication Biktarvy, which generated more than $10.4 billion in sales during 2022. The company is also seeing strong growth in its oncology (cancer) treatments, with revenue increasing 71% last year. And Gilead has generated $35 billion in free cash flow over the last four years. Gilead Sciences also boasts impressive profit margins of around 20%, which is among the highest in the biotech space. This is one of the top biotech stock picks worth checking out.
On the date of publication, Joel Baglole 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.
