3 Promising Biotechnology Stocks To Watch
As we navigate through the promising landscape of the biotechnology sector, fueled by advancements in drug discovery and significant R&D initiatives, investors may find it compelling to consider stocks like Amgen Inc. (AMGN), Regeneron Pharmaceuticals Inc. (REGN), and Gilead Sciences Inc. (GILD). With the U.S. Federal Reserve’s recent interest rate cuts potentially stimulating investment flows, coupled with over 38 new drug approvals by the FDA this year alone, the outlook for the biotech industry appears robust.
The Current Landscape
The biotechnology industry stands at the nexus of innovation and urgent healthcare needs, primarily driven by rising incidences of chronic diseases, a growing demand for personalized medicine, and cutting-edge technologies such as Artificial Intelligence (AI). According to industry forecasts, the global biotech market is expected to reach $4.61 trillion by 2034, growing at a compound annual growth rate (CAGR) of 11.5%. The U.S. market alone is predicted to reach approximately $830.31 billion by 2034.
One particularly exciting area of growth comes from the application of generative AI in drug discovery, which is projected to grow to $472 million by 2032 at an astounding CAGR of 24.9%. This acceleration in innovation means that the biotech sector is well-positioned for solid growth in the foreseeable future. Let’s delve into the fundamentals of three companies making significant strides in this arena.
Stock #3: Amgen Inc. (AMGN)
Amgen is renowned for discovering and developing human therapeutics on a global scale. In recent announcements, AMGN gained FDA approval for Otezla as the first oral medication for treating moderate to severe plaque psoriasis in pediatric patients, enhancing its existing portfolio which includes blockbuster products like Enbrel and Repatha.
In the third quarter of 2024, Amgen reported total revenues of $8.50 billion, marking a substantial 23.2% increase year-over-year. Its non-GAAP net income of $3.02 billion translated into earnings per share (EPS) of $5.58, reflecting a 12.5% increase from the prior year. Additionally, the company projects total revenues for the full year in the range of $33 billion to $33.80 billion, demonstrating strong fundamentals that have contributed to a stock surge of 25.2% over the past year. With a POWR Rating of “B” (Buy), AMGN reflects solid growth potential, especially as it ranks 25th out of 329 biotech stocks.
Stock #2: Regeneron Pharmaceuticals, Inc. (REGN)
Regeneron focuses on discovering and commercializing medicines for treating various diseases globally. Notably, recent three-year data from the Phase 3 PHOTON trial showed promising results for its EYLEA HD product in diabetic macular edema patients.
In its third quarter earnings report, REGN showcased a 10.6% increase in revenues, reaching $3.72 billion, while non-GAAP net income surged to $1.46 billion, equating to $12.46 per share. The stock has enjoyed a 7.5% increase over the past year and is rated “A” or Strong Buy in our POWR ratings system, where it ranks 9th among 329 stocks in the biotech space. Analysts anticipate further growth, projecting 16.4% revenue growth in the first quarter of 2025.
Stock #1: Gilead Sciences, Inc. (GILD)
Gilead Sciences operates at the forefront of biopharmaceuticals with a commitment to addressing unmet medical needs. Their recent partnership expansion with AbTherx to develop novel antibody discovery technologies highlights their innovative capabilities. Additionally, GILD entered a licensing agreement with Hetero to manufacture lenacapavir, enhancing global access to this HIV treatment.
For the second quarter of 2024, GILD reported total revenues of $6.95 billion, a 5.4% increase year-over-year, while net income soared by 49.2%. Gilead predicts product sales to move between $27.10 billion and $27.50 billion for the full year 2024, with EPS expected to reach between $3.60 and $3.90. GILD’s stock has increased by 13.1% over the past year, and it boasts a perfect POWR Rating of “A,” underscoring its substantial growth potential.
Conclusion
In summary, the biotechnology sector is primed for growth driven by innovation, increased drug approvals, and strategic investments. Companies like Amgen, Regeneron, and Gilead are at the forefront with promising pipelines and strong financials, positioning them as attractive options for investors interested in this burgeoning industry. The encouraging economic trends and advancements in drug discovery technologies further solidify their potential for long-term gains, making GILD, REGN, and AMGN stocks to keep an eye on.
