Biotech companies’ success in responding to the COVID-19 pandemic by rapidly developing COVID-19 medicines and vaccines exemplified the sector's importance and garnered significant investor attention. Furthermore, the growing popularity of gene therapies and the increasing prevalence of chronic diseases worldwide have boosted the demand for blockbuster drugs developed by biotech companies. And investors’ optimism surrounding the biotech space is evident in the iShares Biotechnology ETF (IBB) 19.9% return over the past year.
Favorable government regulations, coupled with the introduction of new and sophisticated products, and growing demand for synthetic biology, should keep driving the biotech industry’s growth. Indeed, the global biotechnology market is expected to reach $2.44 trillion in 2028, growing at a 15.8% CAGR.
Considering the industry’s promising growth prospects, we believe shares of biotechnology companies Genmab A/S (GMAB) and Bio-Techne Corporation (TECH) are well-positioned to deliver exceptional returns in the coming months. So, these stocks could be wise bets now.
Click here to checkout our Healthcare Sector Report for 2021
Genmab A/S (GMAB)
Headquartered in Copenhagen, Denmark, GMAB researches, discovers and develops antibody therapeutics for cancer treatment. It has a diverse clinical and preclinical product pipeline and four antibody technologies, including DuoBody bispecific platform, HexaBody platform, DuoHexaBody platform, and HexElect platform.
Last month, GMAB announced that the European Commission (EC) had approved its daratumumab subcutaneous (SC) formulation, marketed as DARZALEX SC in the European Union, in combination with bortezomib, cyclophosphamide, and dexamethasone for the treatment of adult patients with newly diagnosed systemic light-chain (AL) amyloidosis.
Also, last month, GMAB and Bolt Biotherapeutics, Inc announced that they had entered a cancer research and development collaboration. The companies will combine Genmab antibodies and bispecific antibody engineering technologies with Bolt's proprietary BoltbodyTM immune-stimulating antibody conjugate (ISAC) technology platform to discover and develop next-generation immune-stimulatory antibody-based conjugate therapeutics for cancer treatment.
For the first quarter, ended March 31, 2021, GMAB's revenue rose 77.2% from its year-ago value to Kr.1.58 billion ($250.67 million). Its operating income increased 649.3% year-over-year to Kr.532 million ($84.35 million), while its net income grew 307.4% from the prior-year quarter to Kr.1.1 billion ($173.77 million). Its EPS grew 306.2% from the prior-year quarter to Kr.16.61 ($2.64).
The company’s EPS is expected to grow 566.4% year-over-year to $7.33 in its fiscal year 2021. Analysts expect GMAB’s revenue to increase 22.9% year-over-year to $1.56 billion next year. The stock has gained 25.6% over the past year and 26.1% over the past nine months.
GMAB's POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
GMAB has also rated a B for Sentiment and Value. Additionally, within the F-rated Biotech industry, it is ranked #26 of 495 stocks.
To see additional POWR Ratings for Growth, Stability, Quality, and Momentum for GMAB, click here.
Bio-Techne Corporation (TECH)
TECH develops, produces, and distributes biotechnology reagents and devices for use in research and clinical diagnostics. Protein Sciences and Diagnostics and Genomics are the two business segments through which the Minneapolis, Minn., company operates.
Last month, TECH opened a new facility in Dublin, Ireland. With this facility, the company aims to boost its growth by expanding its commitment to support the broader life sciences industry in Europe.
Also, last month, TECH and Catamaran Bio announced an expansion of their collaboration in cell engineering and cell process technologies for Catamaran's CAR-NK cell therapy products. This will enable the company to strengthen its position in the cell therapy space.
TECH’s net sales increased 25.1% year-over-year to $243.55 million in the third quarter ended March 31, 2021. Its operating income grew 43.6% from its year-ago value to $68.63 million. TECH’s net income increased 25.7% year-over-year to $45.78 million. In addition, its EPS increased 21.7% year-over-year to $1.12 over this period.
A $6.47 consensus EPS estimate for the current year represents a 42.2% increase year-over-year. Furthermore, TECH has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. The $917.56 million consensus revenue estimate for the current year represents a 24.2% increase from the same period last year. The stock has gained 74.8% over the past year and 48.7% year-to-date.
TECH’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. TECH also has a B grade for Quality and Sentiment. The stock is ranked #17 of 495 stocks in the same industry.
Beyond the POWR Ratings grades we have just highlighted, one can see additional TECH ratings for Growth, Value, Momentum, and Stability here.
Click here to checkout our Healthcare Sector Report for 2021
GMAB shares were trading at $43.66 per share on Tuesday morning, down $0.42 (-0.95%). Year-to-date, GMAB has gained 7.38%, versus a 18.04% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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