Are These 3 Biotech Stocks Good Buys? Given that the biotech sector is rapidly expanding with robust demand, technology advancements, and government initiatives, fundamentally strong biotech stocks Incyte (INCY), Corcept Therapeutics (CORT), and Entrada Therapeutics (TRDA) look...
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Given that the biotech sector is rapidly expanding with robust demand, technology advancements, and government initiatives, fundamentally strong biotech stocks Incyte (INCY), Corcept Therapeutics (CORT), and Entrada Therapeutics (TRDA) look poised to generate significant returns. Hence, these stocks could be solid additions to your portfolio. Read on.
The biotech industry is well-positioned to thrive, owing to inelastic demand, rapid developments, and government initiatives. So, quality biotech stocks Incyte Corporation (INCY), Corcept Therapeutics Incorporated (CORT), and Entrada Therapeutics, Inc. (TRDA) could be worth buying.
The industry is consistently evolving with advanced technologies like AI. The global Generative AI in Biotech Market is estimated to be worth $472 million by 2032, increasing at a 24.9% CAGR.
Generative AI in biotech entails employing generative artificial intelligence algorithms to generate new data based on trends in existing datasets. This is used in drug discovery, protein engineering, diagnostics, and customized medicine.
Moreover, the biotechnology market is expected to reach $471.34 million by 2025, growing at a CAGR of 10.5%. The industry is likely to grow and evolve in the coming years due to the rising demand for healthcare services and creative research and development in the sector.
Investors' interest in biotech stocks is evident from the iShares Nasdaq Biotechnology Index Fund (IBB) 12% returns over the past nine months.
Let's delve deeper into the fundamentals of the stocks.
Incyte Corporation (INCY)
INCY specializes in the development and commercialization of therapeutics in the United States. The company operates in two therapeutic areas: Hematology/Oncology; and Inflammation and Autoimmunity.
On May 1, 2023, INCY announced that when adult patients with atopic dermatitis were treated with Opzelura® (Ruxolitinib) cream, they saw a rapid and significant relief in itch, which lasted for 28 days. Such encouraging findings may strengthen Opzelura's position as an effective, well-tolerated topical non-steroidal therapy for atopic dermatitis.
INCY's forward non-GAAP P/E multiple of 18.59 is 43.2% lower than the industry average of 20.07. Its forward EV/Sales multiple of 2.93 is 21.8% lower than the industry average of 3.74.
INCY's trailing-12-month EBITDA margin of 16.59% is 369.9% higher than the industry average of 3.53%. Its trailing-12-month asset turnover ratio of 0.64 is 83% higher than the industry average of 0.35.
For the fiscal 2023 first quarter that ended March 31, INCY's total revenues increased 10.3% year-over-year to $808.67 million, while its net product revenues grew 14.4% from the prior-year quarter to $693.24 million.
Also, its total liabilities and stockholders' equity came in at $5.80 billion for the period that ended March 31, 2023, compared to $5.84 billion for the period that ended December 31, 2022.
The consensus revenue estimate of $3.71 billion for the year ending December 2023 represents a 9.3% increase year-over-year. Its EPS is expected to grow 20.9% year-over-year to $3.36 for the same period. INCY's shares have gained marginally over the past month to close the last trading session at $62.94.
INCY's POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
INCY has an A grade for Value and a B for Quality. Within the Biotech industry, it is ranked #18 out of 383 stocks. Click here for the additional POWR Ratings for Growth, Stability, Momentum, and Sentiment for INCY.
Corcept Therapeutics Incorporated (CORT)
CORT engages in the discovery and development of drugs for the treatment of severe metabolic, oncologic, endocrine, and neurological disorders in the United States.
CORT's trailing-12-month gross profit margin of 98.67% is 76.7% higher than the industry average of 55.84%. Its trailing-12-month EBITDA margin of 24.50% is 593.9% higher than the industry average of 3.53%.
CORT's net product revenues increased 39.6% year-over-year to $119.13 million in the fiscal first quarter that ended March 31, 2023. Its non-GAAP net income increased 28.9% year-over-year to $40.13 million. Also, its non-GAAP EPS increased 29.4% year-over-year to $0.66.
Analysts expect CORT's revenue to increase 10.5% year-over-year to $443.94 million for the year ending December 2023. Its EPS is expected to come in at $0.64 for the same period. The stock has gained 4.6% over the past six months to close the last trading session at $21.59.
CORT's POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It is ranked #20 in the same industry. It has an A grade for Quality and a B for Value. To see additional CORT's ratings for Growth, Sentiment, Stability, and Momentum, click here.
Entrada Therapeutics, Inc. (TRDA)
TRDA is a biotechnology company, develops endosomal escape vehicle (EEV) therapeutics for the treatment of multiple neuromuscular diseases.
TRDA's forward EV/Sales multiple of 1.56 is 57.9% lower than the industry average of 3.71.
TRDA's trailing-12-month CAPEX / Sales of 15.68% is 235.6% higher than the 4.67% industry average. Its trailing-12-month gross profit margin of 70.77% is 26.7% higher than the 55.84% industry average.
TRDA's total assets came in at $475.57 million for the period that ended March 31, 2023, compared to $252.06 million for the period that ended December 31, 2022. Also, its cash and cash equivalents came in at $227.65 million, compared to $45.16 million in the same period.
The stock has gained 24.5% over the past year to close the last trading session at $12.21.
TRDA has an overall B rating, equating to a Buy in our POWR Ratings system. It has a B grade for Value and Sentiment. It is ranked #21 in the same industry.
Beyond what is stated above, we've also rated TRDA for Growth, Value, Stability, Momentum, and Quality. Get all TRDA ratings here.
What To Do Next?
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INCY shares rose $0.82 (+1.30%) in premarket trading Tuesday. Year-to-date, INCY has declined -21.64%, versus a 13.67% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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