As biotech companies continue to develop new therapies and technologies, they can potentially drive significant value for investors. Therefore, while there may be short-term fluctuations and challenges in the biotech market, the long-term outlook for the industry is generally positive.
Given this backdrop, it would be wise to check out fundamentally sound stocks Amicus Therapeutics, Inc. (FOLD), Ardelyx, Inc. (ARDX), and Genfit S.A. (GNFT) that look well-positioned to brave through current market challenges and could offer investors the opportunity to reap significant rewards in the future.
Rapid innovation has propelled the biotech sector in recent years. This trend is expected to continue in the upcoming years through increasing usage of personalized medicine, Artificial Intelligence (AI), drug research, and big data.
On the backs of favorable government initiatives to support the sector, the global biotechnology market, which was estimated at $859.94 billion in 2022, is expected to be worth around $1.68 trillion by 2030, growing at a CAGR of 8.7% from 2023 to 2030.
Due to the increasing demand for healthcare services and the innovative research and development being conducted in the biotech sector, the industry is expected to continue growing and evolving in the coming years.
On top of it, investors’ interest in biotech stocks is evident from the SPDR S&P Biotech ETF’s (XBI) gains of 8.3% and 8% over the past year and the past month, outpacing the broader S&P 500 index’s declines of 2% and 0.8% over the same period, respectively.
Let us delve deeper into the fundamentals of the above-mentioned stocks in detail.
Amicus Therapeutics, Inc. (FOLD)
FOLD is a biotechnology company that focuses on discovering, developing, and delivering medicines for rare diseases. Its commercial product and product candidates include Galafold, an oral precision medicine for the treatment of adults with a confirmed diagnosis of Fabry disease.
On April 26, FOLD announced that it had received a positive opinion from the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) for its investigational drug miglustat, the enzyme stabilizer component of AT-GAA, which is a combination therapy for the treatment of Pompe disease.
The recommendation of a marketing authorization of the miglustat treatment could add to the company’s revenue stream in the future.
FOLD’s net product sales increased 7.8% year-over-year for the fiscal year that ended on December 31, 2022, to $329.23 million. The company’s gross profit came in at $290.63 million, representing a 7.2% increase year-over-year. Also, its total current liabilities declined 4.8% from the year-ago value to $139.02 million as of December 31, 2022.
Analysts expect FOLD’s revenue for the first quarter that ended March 31, 2023, to increase 5.7% year-over-year to $83.21 million. Moreover, its revenue grew at a CAGR of 21.8% and 54.9% over the past three and five years, respectively.
The stock has gained 72.8% over the past year to close the last trading session at $12.06. It is up 19.4% over the past six months.
FOLD’s POWR Ratings reflect this promising outlook. The stock 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.
It has a B grade for Growth. It is ranked #30 in the Biotech industry. To see additional POWR Ratings of FOLD for Value, Momentum, Stability, Sentiment, and Quality, click here.
Ardelyx, Inc. (ARDX)
Biopharmaceutical company ARDX discovers, develops, and commercializes medicines to treat gastrointestinal and cardiorenal therapeutic areas. The company's lead product candidate is tenapanor for the treatment of patients with irritable bowel syndrome with constipation.
On May 3, ARDX provided a business update. Mike Raab, president and chief executive officer of ARDX, said, “During the first quarter of 2023, we demonstrated progress towards achieving our goals for 2023. At one-year post-launch, IBSRELA is being recognized as an important medicine for IBS-C and is delivering meaningful benefits to patients. We are consistently gaining market share with our innovative commercial strategy.”
ARDX’s total revenue increased significantly year-over-year for the first quarter that ended on March 31, 2023, to $11.37 million. This can be attributed to a significant year-over-year increase in net product sales to $11.36 million. Also, its cash and cash equivalent amounted to $92.49 million for the same period, up 96.5% from the prior-year period.
Street expects ARDX’s revenue for the second quarter (ending June 2023) to increase 492.8% year-over-year to $14.97 million. Moreover, it surpassed the EPS estimates in three of its trailing four quarters, and the revenue estimates in each of its trailing four quarters.
Also, ARDX’s revenue grew at a CAGR of 114.6% over the past three years. Over the past year, the stock has gained 425.3% to close the last trading session at $4.68. It has gained 216.2% over the past six months.
ARDX’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to Buy in our proprietary rating system.
It has a B grade for Growth and Sentiment. Within the same industry, it is ranked #34. Click here to see the other ratings of ARDX for Value, Momentum, Stability, and Quality.
Genfit S.A. (GNFT)
Headquartered in Loos, France, GNFT is a biopharmaceutical company that engages in discovering and developing drug candidates and diagnostic solutions for metabolic and liver-related diseases. In addition, the company develops Elafibranor, which is in Phase III clinical trial to treat patients with primary biliary cholangitis.
The company expects to announce topline results for its ELATIVE® study toward the end of the second quarter of 2023. The company also has other clinical programs underway.
During the fiscal year (ended December 31, 2022), GNFT’s revenues and other income amounted to €26.57 million ($29.33 million). As of December 31, 2022, its total current liabilities stood at €39.37 million ($43.46 million), representing a 37.3% decline year-over-year, while its cash and cash equivalent amounted to €136 million ($150.15 million).
The consensus EPS estimate for the fiscal year 2023 (ending December 31, 2023) is $0.10, while the consensus revenue estimate of $75.78 million for the current fiscal year indicates a 239.6% increase from the prior year.
GNFT’s revenue grew at a CAGR of 30.8% over the past five years. GNFT’s shares have gained 17.4% over the past year and 13% over the past six months to close the last trading session at $4.27.
It’s no surprise that GNFT has an overall rating of B, which equates to Buy in our proprietary rating system. It has an A grade for Value and a B for Sentiment. Within the same Industry, it is ranked #31.
In addition to the POWR Ratings we stated above, we also have GNFT’s ratings for Growth, Momentum, Stability, and Quality. Get all GNFT ratings here.
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FOLD shares were trading at $11.80 per share on Thursday afternoon, down $0.26 (-2.16%). Year-to-date, FOLD has declined -3.36%, versus a 6.32% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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