Biotechnology is a booming industry recently focused on synthetic biology, biomanufacturing and gene editing. Biotech is seen as the key to the future, as it has the potential to cure diseases and save many lives. In fact, the global biotechnology market is currently valued at $1.22 trillion and is expected to grow to $3.21 trillion by 2030. That shows a possible compound annual growth rate of 12.8%. In comparison, the S&P 500 has a growth rate of 9.51% per year.
Plus, biotech industry revenue increased tenfold from $19.7 billion in 2005 to $190.0 billion in 2022. While biotech stocks are more risky since they are more volatile than most, they have a high potential due to their products focusing on biological innovation, health and safety and assets of the future. Here are three biotech stocks investors should keep a keen eye on.
BioNTech (BNTX)
BioNTech (NASDAQ:BNTX) is a prominent German-based biotech company focusing on fundamental research and developing immunotherapies that harness the immune system’s full potential to combat cancer, infectious diseases and other serious health conditions. The company is currently trading at $99.56, with Yahoo Finance analysts projecting a one-year price range of $105.82 to $259.56, with an average target price of $145.16.
The pandemic’s end caused shares of BNTX to dip. Still, the stock presents itself as an undervalued stock in the healthcare sector. It has a P/E ratio of 5.3x, significantly less than its industry peers’ average of 15.5x, overall predicting a promising upside.
BioNTech reported third-quarter fiscal 2023 earnings per share of 0.67 Euros despite analysts predicting a loss. That could’ve resulted from Ugur Sahin, CEO and co-founder of BioNTech, stating the company is expanding its portfolio to treatments for cancer and other conditions, which bodes well for the company’s future.
BioNTech deserves consideration from all investors due to its compelling combination of strong earnings performance and promising projected growth, signaling significant long-term potential.
McKesson (MCK)
McKesson (NYSE:MCK) is a diversified biotech leader, as it strives to change the lives of not only its patients but to better healthcare as a whole. From the pharmacy to new innovative technologies to life-changing therapies, McKesson’s dedication will bring its mission to reality. Yahoo Finance analysts estimate it will trade within a one-year price range of $450 to $530, averaging around $497.75.
Looking at McKesson’s financials, its revenue of $291 million is already representative of such a strong and established company. But it’s the change in revenue over the past almost four years that makes it enticing — a $60 million difference or a 26% increase from its 2020 revenue of $231 million. Along with that huge revenue growth, EPS has grown from a value of $4.98 towards the beginning of 2020 to $26.98 TTM — about a 450% increase.
McKesson’s valuation, especially the P/E ratio, is just as impressive. The company’s P/E ratio stands at 17.01x TTM, a 43% increase compared to its five-year average P/E of 11.91. All this sets McKesson up not only as a great healthcare stock but also one poised for future expansion, reinvestment and adaptability.
Cencora (COR)
Formerly known as AmerisourceBergen Corp, Cencora (NYSE:COR) is a prime biotech company that plays a crucial role in unlocking, innovating and evolving what pharmaceutical and biopharma therapies can do — not just for humans but for animals too. Yahoo Finance analysts estimated it will trade within a one-year price range of $192 to $227, averaging around $212.83.
Financially, Cencora is excelling and demonstrating its ability to surpass competitors in the biotech industry. In the last year, Cencora reported an impressive revenue of $254.4 million, about a 34% increase from its revenue of $189.9 million less than four years ago. Not only that, but Cencora’s EPS has consistently grown, climbing 11% from its value of $7.48 in 2021 to $8.30 TTM.
Cencora’s eye-catching valuation is what makes it appealing. Its P/E ratio stands at 16.48x TTM, a 21% growth in comparison to its five-year average P/E of 13.63x. All that makes the company a great biotech stock with not only a goal to change the world but, in the future, the means to do it.
On the date of publication, Ian Hartana and Vayun Chugh did not hold (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.
