Are These Biotech Stocks On Your Watchlist This Month?
Last month turned out to be a positive month for biotech stocks. As reflected in the Nasdaq Biotechnology Index (NBI), the index rose by nearly 10%. Everyday investors wake up with the hope that a vaccine has been found. We all are because we know that such news would prop up the stock market.
Regardless of what each of us thinks are the best biotech stocks to buy, we all share the same goal. And that is to make money. That said, investors have been looking for the top biotech stocks to buy. Currently, the industry in which you are most likely to have a breakout overnight would be in the biotechnology space. But of course, not all biotech stocks can make such a return. Many of them only went up for a short period of time. And before you know it, you are already seeing them in the red. Hence, when it comes to investing, don’t forget your rules. The important part is making tons of research and piece the findings together to build your strategies.
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How To Find The Best Biotech Stocks To Buy In 2020
In the end, we need to know the difference between a few types of stocks. First, are you planning to invest a particular stock for a long term? Or are you looking to trade biotech stock for a quick flip?
If you are into biotech stocks for a long timeframe, your focus might want to be those that already have a working product and are currently profitable. On the flip side, if you are looking for a potential breakout overnight, then the focus will be on small cap biotech stocks . However, the downside that comes with small cap biotech stocks is that it can be quite volatile. And some investors may not like that. As such, here are a few biotech stocks that have strong growth prospects which could justify the risks.
Top Biotech Stocks To Buy [Or Avoid]: Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX Stock Report) is a leader in treatments for cystic fibrosis (CF) and is currently monopolizing the CF treatment. This allows the company to shield itself from the coronavirus pandemic and broader economy. Consumers will still need to depend on CF drugs regardless of the broader state of the economy.
The company is not resting on its laurels by relying on just one single treatment to sustain the company. Vertex is also working on investigational drugs for pain, sickle cell disease and beta thalassemia. These potential treatments offer future growth possibilities that may compensate for when the sales of older drugs are slowing down. As for now, cystic fibrosis drugs that were approved in October are the main revenue stream for the company. For instance, Trikafta, a combination medication with the potential to treat up to 90% of people with CF, generated $420 million in the fourth quarter. In the first quarter this year, the revenue achieved has more than doubled to $895 million.
The revenue posted was rather reassuring during the coronavirus pandemic, when many companies could not keep up with their revenue growth. The cash pile also gives Vertex the chance to venture into new drug candidates, or even partnering with other biotech companies to develop vaccines and treatments for Covid-19. These could potentially serve as a catalyst that might prop up the Vertex stock in the future. Given the strength of the company’s balance sheet and product pipeline, is VRTX stock worth the investment?
Top Biotech Stocks To Buy [Or Avoid]: BioMarin Pharmaceutical
BioMarin Pharmaceutical (BMRN Stock Report) has not escaped the market sell-off in March caused by the coronavirus pandemic. The stock plunged 26% from its high to $71.37 per share. But the sell-off was temporary, as the stock quickly rebounded by more than 50% since March. As for the impact of coronavirus, the company is less shielded as compared to Vertex. That’s primarily due to interruptions like missed infusion appointments or delays to start new treatments. But that’s not much to worry about as the impact is not highly significant.
Chief executive officer Jean-Jacques Bienaime said in the earnings report that 2020 would be “transformational” for BioMarin for two reasons. For the full year, the company expects to be profitable for the first time on a GAAP basis. And the potential approval of BioMarin’s valoctocogene roxaparvovec would make it the first approval of a gene therapy for any type of hemophilia.
Currently, BioMarin has seven products on the market, all specialising in the niche area of rare genetic diseases. All the commercial products generated revenue in the billions of dollars. One particular treatment, Vimzin, surpassed $500 million in annual sales. Given the strengths of the company’s products, its revenue has been on the rise for more than a decade. With a couple of drugs in the pipeline, we could see future revenue continuing to grow.
Judging from BioMarin’s historical growth, its moat around rare genetic diseases, and the potential approval of the company’s hemophilia A drug, would BMRN stock be a good buy right now?