Healthy Profits: Keep an Eye on These 2 Buy-Rated Biotech Stocks in May
This investment newsletter recommends two specific stocks, Alkermes (ALKS) and Nippon Shinyaku (NPPNY), as good buys for the year ahead. The reasoning is based on positive industry trends for the biotech sector as a whole.
This year, the biotech industry is expected to grow due to new developments and increased investments. Alkermes (ALKS), Nippon Shinyaku Nippon Shinyaku Nippon Shinyaku Nippon Shinyaku Nippon Shinyaku Nippon Shinya (NPPNY), and Nippon Shinyaku Nippon Shinyaku Nippon Shinyaku Nippon Shinyaku Nippon Shinyak (NPPNY), two biotech stocks with strong fundamentals, may be the best buys. Continue reading.
Despite economic headwinds the SPDR S&P Biotech ETF has gained 5.1% in the last month. This shows investors' confidence. The biotech industry is expected to grow due to technological advances and regulatory permissiveness.
In light of the current market, I believe that quality biotech stocks Alkermes plc. (ALKS) as well as Nippon Shinyaku Co., Ltd., (NPPNY), both of which have maintained steady profit margins, are worth purchasing now. Our proprietary rating system gives these stocks a Buy rating.
The biotechnology industry is flourishing, thanks to technological advances. Key market players are constantly launching new products in order to maintain their leadership position. Data Bridge Market Research estimates that the biotechnology industry will reach $10.13 trillion in 2030, with a 29% CAGR.
The pandemic also has increased the demand for digitalization, personalized medicine and telemedicine. These are all expected to be the driving forces behind the growth of the industry.
Market growth for companion diagnostics and personalized medicine is anticipated due to an increase in rare diseases, and the growing understanding of the human genome.
Global personalized medicine market will grow at a 10.9% CAGR to reach $540.12 Billion by 2028.
Raj Lala is the President and CEO of Evolve Funds. He recently stated that biotech companies would still perform well even if the US enters a recession.
Check out the stocks listed above:
Alkermes plc (ALKS)
ALKS, a biopharmaceutical firm headquartered in Dublin, Ireland develops and markets pharmaceutical products that address unmet medical needs in different therapeutic areas of the United States, Ireland and abroad.
The asset turnover ratio for the trailing 12 months of 0.57x was 64.5% greater than the industry average of 0.35x. Its gross profit margin for the trailing 12 months of 80.48% was 44.6% greater than the industry average of 55.65%.
ALKS's total revenues for the three months ended March 31, 2020 were $287.60 millions, up from $278.55 for the same period the previous year. Non-GAAP Net Income was $2.42 Million for the quarter. Non-GAAP Earnings per Share was $0.01.
ALKS's revenue for the second quarter of fiscal 2023 ending June 2023 is expected to increase 15.3% over the previous year to $318.39 millions. The EPS of the company for the same period is expected to be $0.01. The stock's EPS and revenue have exceeded consensus estimates in three out of the last four quarters.
The stock closed the last trading day at $28.55. It has risen 22.4% in the past six-months.
The POWR ratings of ALKS reflect the positive outlook for this company. The stock is rated A in our proprietary system, which means it's a strong buy. The POWR ratings are calculated by weighing 118 factors to the optimal level.
ALKS has also been given a B-grade for Growth, Sentiment Value and Quality. It is ranked number one out of 383 stocks within the Biotech sector.
Click here to access additional ratings of ALKS Stability and Momentum.
NPPNY, with its headquarters in Kyoto, Japan manufactures and markets pharmaceuticals and food products in Japan and abroad. The company is divided into two segments: Pharmaceuticals and Functional Food.
The industry average gross profit margin is 55.65%. This company's 12-month trailing gross profit margin is 61.12%, which is 9.8% more than that. The trailing-12 month asset turnover ratio is 0.65x, which is 85.1% more than the industry average of 0.35x.
NPPNY increased its revenue by 3.4% on an annual basis to Y=109.92billion ($821.42m) for the third fiscal quarter that ended March 31, 2023. Operating income for the company was Y=27.99billion ($209.15m), and profit attributable owners were Y=22.67billion ($169.44m).
Analysts predict that NPPNY will see its revenue increase 12.6% over the past year to $271.50 millions for the third fiscal quarter ending March 2023. The stock also exceeded consensus revenue estimates for three of the last four quarters.
The stock closed the last trading day at $11.30, a slight gain over the previous month.
The strong fundamentals of NPPNY are reflected by its POWR ratings. The stock is rated B overall, which is equivalent to a buy in our proprietary rating system.
NPPNY has also been given a B-grade for Value, Stability and Quality. It is ranked #11 in the same sector.
Click here to access additional ratings of NPPNY Growth, Sentiment, & Momentum.
ALKS shares were unchanged during premarket trading on Monday. ALKS shares have gained 9.26% year-to-date compared to a 9.17% increase in the benchmark S&P 500 Index during the same time period.
Nidhi Aggarwal is the author.
Nidhi's passion for the capital markets and wealth management led her to pursue an investment analyst career. She has a Bachelor's in Finance and Marketing and is currently pursuing the CFA Program. Her fundamental approach in analyzing stocks can help investors identify the best investments.