7 Cheap Biotech Stocks With Major Upside Potential

  • Bio-Techne (TECH): Bio-Techne offers critical life science reagents, making it a relevant player for various innovations.
  • Gilead Sciences (GILD): Gilead Sciences is a top developer of medicines, known for its HIV/AIDS therapeutic.
  • Exelixis (EXEL): Exelixis specializes in oncology, particularly difficult-to-treat cancers.
  • Don’t ignore these other compelling cheap biotech stocks to buy.
Cheap Biotech Stocks - 7 Cheap Biotech Stocks With Major Upside Potential

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Intuitively, the case for biotechnology-related investments comes across rather obviously: the concept of healthcare should be a permanent one. And because of this permanence, the expected market value of the ecosystem should be massive. Grand View Research estimates that it would be worth $3.88 trillion by 2030. Still, the opportunistic investor may want to consider cheap biotech stocks.

It comes down to adding more pieces on the table. You can always elect the high-flying names that command rich multiple premiums: there’s safety in numbers after all. At the same time, with so many people crowding into the same ideas, the upside reward could be limited. On the other end, you could be a little more daring and choose underappreciated ideas.

It will be risky, no doubt about it. However, publicly traded enterprises that are priced at relatively low multiples compared to where they previously stood potentially offer greater upside potential. With that in mind, consider these fundamentally cheap biotech stocks.

Bio-Techne (TECH)

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Based in Minneapolis, Minnesota, Bio-Techne (NASDAQ:TECH) along with its subsidiaries develops, manufactures and sells life science reagents, instruments and services for the research and clinical diagnostic markets. Its main region is the U.S, though it also serves the U.K., the rest of Europe and many other international markets. The business is especially important for genomics sector due to the underlying relevancy in drug development.

During the past four quarters, Bio-Techne posted earnings per share of 46 cents. This essentially matched the overall estimate. However, it took a sizable win in the first quarter of 2024 to overcome earnings misses in Q3 and Q4. During the trailing 12 months (TTM), Bio-Techne posted net income of $202.96 million on sales of $1.15 billion.

Presently, TECH stock trades at 9.97X trailing-year sales. However, in the past year, this metric was up to 10.62X. Therefore, it’s possible that TECH could grow into its prior valuation. That’s what analysts are anticipating, with sales hitting $1.16 billion and $1.25 billion, respectively, in fiscal 2024 and 2025. This would translate to 2% and 7.7% up, making TECH one of the cheap biotech stocks to consider.

Gilead Sciences (GILD)

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Headquartered in Foster City, California, Gilead Sciences (NASDAQ:GILD) is a biopharmaceutical firm that discovers, develops and commercializes medicines, particularly for unmet medical needs. It’s well known for developing a therapeutic for HIV/AIDS. During the wild period that was the Covid-19 pandemic, it introduced an injection to treat symptoms associated with SARS-CoV-2 infection.

Financially, it’s not the most consistent player but overall, it gets the job done. In the past four quarters, Gilead posted EPS of 98 cents. This beat out the consensus view of almost 93 cents. However, the company incurred earnings misses in Q2 and Q4. Also, Gilead went into red ink in Q1 2024, though to a lesser degree than anticipated.

Right now, GILD stock trades at 3.05X trailing-year sales. Over the past year, this metric stood at 3.6X. Again, this is one of those ideas that could potentially grow into its former valuation. Covering experts are hoping for exactly that, though to a more moderate degree. Sales could improve 1% to $25.57 billion in fiscal 2024, while the top line could rise 1.3% to $25.89 billion the following year.

Keep in mind that GILD also pays a forward yield of 4.62%. Overall, it’s one of the cheap biotech stocks to consider.

Exelixis (EXEL)

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Hailing from Alameda, California, Exelixis (NASDAQ:EXEL) is an oncology specialist. It focuses on the discovery, development and commercialization of new medicines for difficult-to-treat cancers. Notably, Exelixis brings to the table Cabometyx, which is a therapeutic for the treatment of advanced renal cell carcinoma, particularly for patients who received prior anti-angiogenic therapy. It also offers solutions in other areas, such as hypertension.

Although offering a compelling narrative, where Exelixis falls a bit short is in the financials. In the past four quarters, the company posted EPS of 16 cents. However, this figure missed the analysts’ overall consensus view of 17.5 cents. This led to a negative earnings surprise of 16.3%, which isn’t flattering.

However, this framework could also be an opportunity for picking up cheap biotech stocks. Specifically, EXEL trades at 3.79X trailing-year sales. Over the past year, this metric stood at 4.07X. What’s more, its current forward earnings multiple sits at 17.12X. In the past year, it was 23.45X.

For fiscal 2024, covering experts believe EPS could skyrocket nearly 74% to $1.13. In addition, the top line could rise by 2.6% to $1.88 billion.

Alnylam Pharmaceuticals (ALNY)

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Based in Cambridge, Massachusetts, Alnylam Pharmaceuticals (NASDAQ:ALNY) is a biopharmaceutical firm focused on the discovery, development and commercialization of novel therapeutics based on ribonucleic acid interference (RNAi). This is a cutting-edge technology with the potential to address a wide range of diseases. Some of these conditions include HBV infection, hypertension, Alzheimer’s disease and liver disease.

Although a promising enterprise, Alnylam is undoubtedly a higher-risk play. During the past four quarters, the company averaged a loss per share of 67 cents. While red ink is never a good look, it must be said that analysts anticipated a loss of $1.30 per share. Therefore, the average quarterly surprise came out to 49.3%.

What’s intriguing here is the multiple. Right now, ALNY stock trades at 15.71X trailing-year sales. In the past year, the market priced Alynylam at 17.1X. Therefore, it’s possible that ALNY could grow into its prior valuation.

For fiscal 2024, experts believe that the top line could expand by 2.7% to $1.88 billion. In the following year, sales could hit $2.32 billion, up a whopping 23.7%. It’s a tempting idea for cheap biotech stocks.

Harmony Biosciences (HRMY)

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Headquartered in Plymouth Meeting, Pennsylvania, Harmony Biosciences (NASDAQ:HRMY) is a commercial-stage pharmaceutical firm that focuses on bringing to market therapies for patients suffering from rare and other neurological diseases. Its mainline therapeutic is called Wakix, a molecule with a novel mechanism of action for the treatment of excessive daytime sleepiness in adult patients with narcolepsy.

What’s particularly enticing about Harmony is that while it’s a smaller entity, it manages to generate respectable numbers. For example, during the past four quarters, it posted an average EPS of nearly 58 cents. Unfortunately, analysts were looking for 59 cents during this period. The average earnings surprise came out to 2.2% below parity.

However, there could be an intriguing discount here. The market prices HRMY stock at 3.06X trailing-year sales. In the past year, however, this metric stood at 4.05X. There could be some opportunity for growth.

In fiscal 2024, analysts believe that the top line could expand by 22% to $710.15 million. Further, the high-side estimate calls for $718.4 million. And in fiscal 2025, revenue could soar to $836.82 million. It’s one of the top cheap biotech stocks to buy.

Amgen (AMGN)

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Calling Thousand Oaks, California home, Amgen (NASDAQ:AMGN) technically falls under the drug manufacturing space. It’s a massive entity, with 26,700 full-time employees. Per its public profile, Amgen discovers, develops, manufactures and delivers human therapeutics worldwide. The company’s mainline products include Enbrel to treat plaque psoriasis and Kyprolis for refractory multiple myeloma.

It offers a whole host of other solutions as well. Financially, it’s a solid player, with the company posting an average EPS of $4.58 during the past four quarters. In contrast, the analysts’ estimate sat at $4.33. Therefore, the earnings surprise came in at 5.55%.

Currently, AMGN stock trades at 5.66X trailing-year sales. That’s a premium to the metric of 5.23X over the past one-year period. That might seem a bit rich. However, keep in mind that in fiscal 2024, sales could hit $30.57 billion. If so, that would be an increase of 16.1%. Further, the high-side estimate calls for $31.39 billion.

Not only that, fiscal 2025’s most optimistic target is reaching for $33.28 billion. Offering a forward yield of 2.9%, AMGN makes a solid case for cheap biotech stocks to buy.

Incyte (INCY)

incy stock
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Headquartered in Wilmington, Delaware, Incyte (NASDAQ:INCY) is a biopharmaceutical company that engages in the discovery, development and commercialization of therapeutics for hematology and oncology. As well, it targets solutions for inflammation and autoimmune diseases. Its main treatment is Jakafi for intermediate or high-risk myelofibrosis, along with other conditions.

Although one of the arguably riskier ideas among cheap biotech stocks, Incyte has been known to deliver strong financial results. In the past four quarters, it posted an average EPS of almost 95 cents. Unfortunately, this was a bit below the analysts’ estimate of 96.3 cents. This yielded an earnings surprise of 1.3% below parity.

Currently, INCY stock trades hands at 3.44X trailing-year sales. In the past year, this metric stood at 3.98X. Also, its forward multiple sits at 12.45X. It used to average 14.6X. Thus, INCY just might grow into its prior valuation.

For fiscal 2024, analysts anticipate EPS growth of 21.3% to $4.27. In addition, the top line could expand by 10.5% to $4.08 billion. In the following year, EPS could soar to $5.33 on sales of $4.51 billion. If you can handle the heat, INCY is one of the cheap biotech stocks to consider.

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.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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