FDA and EUA regulatory approvals, rising investment, and policy backing from governments worldwide point to a promising future for the biotech industry. Further, the sector could also benefit from an aging population and the increasing preference for online and remote diagnosis and treatment of patients worldwide.
With rising chronic diseases and growing investments in research and development, the biotech industry is poised to grow considerably this year and beyond. The global biotechnology market is projected to reach $1040.1 billion by 2030, growing at a 7.5% CAGR.
Given this backdrop, we think it could be profitable to invest in fundamentally sound biotech stocks La Jolla Pharmaceutical Company (LJPC), MiMedx Group, Inc. (MDXG), and Selecta Biosciences Inc. (SELB), which are currently trading below $5.
Click here to checkout our Healthcare Sector Report for 2022
La Jolla Pharmaceutical Company (LJPC)
LJPC develops and commercializes therapies that enhance outcomes in patients suffering from life-threatening diseases. The company provides GIAPREZA, a vasoconstrictor to increase blood pressure in adults with septic or other distributive shocks; and XERAVA, a tetracycline-class antibacterial for the treatment of complicated intra-abdominal infections in patients 18 years of age and older.
For the fourth quarter ending Dec. 31, 2021, LJPC's total revenue increased 126.6% year-over-year to $75.72 million. Its income from operations amounted to $21.83 million compared to a $35.84 million loss from operations in the prior-year quarter, while its net income amounted to $19.66 million, versus a $39.42 million net loss in the previous period. The company's EPS amounted to $0.58, compared to a $1.44 loss per share in the prior-year quarter.
The consensus EPS estimate of $0.28 for its fiscal year 2023 represents a 180% improvement year-over-year. Analysts expect LJPC's revenue to increase 11.2% year-over-year to $14.81 million during the third quarter, ending Sept. 30, 2022. The stock has declined 6.1% in price over the past month to close its last trading session at $3.88.
LJPC'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 distinct factors, each with its own weighting.
The stock also has an A grade for Quality and a B for Value and Sentiment. Within the Biotech industry, it is ranked #14 of 402 stocks.
To see additional POWR Ratings for Growth, Stability, and Momentum for LJPC, click here.
MiMedx Group, Inc. (MDXG)
MDXG in Marietta, Ga., develops and distributes placental tissue allografts for various healthcare sectors. It processes human placental tissues utilizing its patented and proprietary PURION process to produce allografts that retain the tissue's inherent biological properties and regulatory proteins.
MDXG's adjusted net sales amounted to $67.29 million for the fourth quarter, ending Dec. 31, 2021. Its adjusted EBITDA amounted to $3.53 million, while its net income came in at $2.22 million, compared to a $16.58 million net loss in the prior-year quarter. The company's EPS stood at $0.01 compared to a $0.17 loss per share in the previous period.
Analysts expect MDXG's revenue to increase 14.9% year-over-year to $72.50 million for the third quarter, ending Sept. 30, 2022. The stock has declined 12.5% over the past month to close its last trading session at $4.00.
MDXG'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. The stock also has an A grade for Sentiment and a B for Value and Quality. Within the Biotech industry, it is ranked #12.
In total, we rate MDXG on eight distinct levels. Beyond what we have stated above, we have also given MDXG grades for Momentum, Stability, and Sentiment. Get all the MDXG ratings here.
Selecta Biosciences, Inc. (SELB)
SELB is a clinical-stage biopharmaceutical company that researches and develops nanoparticle immunomodulatory drugs to treat and prevent human diseases. The Watertown, Mass.-based company's lead therapeutic gene therapy program is SEL-302, which is in the preclinical stage, to improve the treatment of methylmalonic acidemia.
During the fourth quarter, ending Dec. 31, 2021, SELB's collaboration and license revenue increased 150.4% year-over-year to $29.94 million. Its operating income amounted to $4.08 million compared to an operating loss of $7.90 million in the prior-year quarter, while its net income came in at $12.24 million, compared to a $15.45 million net loss in the previous period. The company's EPS stood at $0.03 compared to a $0.14 loss per share in the prior-year quarter.
Analysts expect SELB's revenue to increase 18.7% year-over-year to $13.12 million for the first quarter ending March 31, 2022. The stock has declined 41% over the past month to close its last trading session at $0.81.
SELB's strong fundamentals are reflected in its POWR Ratings. SELB has a B grade for Sentiment, Value, and Growth. Within the Biotech industry, it is ranked #32.
Click here to see the additional POWR Ratings for SELB (Stability, Quality, and Momentum).
Click here to checkout our Healthcare Sector Report for 2022
What To Do Next?
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What gives these stocks the right stuff to become big winners?
First, because they are all low-priced companies with explosive growth potential, that excel in key areas of growth, sentiment and momentum.
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LJPC shares were trading at $4.05 per share on Wednesday morning, up $0.17 (+4.38%). Year-to-date, LJPC has declined -12.90%, versus a -11.39% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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