PFE - 7 Undervalued Biotech Stocks to Buy Before They Boom
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With fears of a global recession rising, it’s natural that investors have turned their back on growth-intensive names. However, this backdrop has also yielded compelling undervalued biotech stocks to buy. While very few sectors have been spared the damage stemming from soaring inflation, geopolitical instability and supply chain disruptions, the biological sciences arena offers long-term relevance.
Mainly, it doesn’t matter whether a recession is about to capsize our economy or not. Since humans remain vulnerable to various diseases and medical conditions, it’s imperative that researchers continue to move forward. Therefore, undervalued biotech stocks to buy command significant interest because at some point, they have the potential to rise substantially higher.
To be fair, the underlying sector is volatile. And many times, a company sheds basis points in the equities market for a reason — often not a good one. Still, if you have some spare funds for speculation, these undervalued stocks to buy could offer significant bang for your buck.
TickerCompanyRecent PriceBMRNBioMarin Pharmaceutical$85.28IONSIonis Pharmaceuticals$37.64EXELExelixis$20.78ISRGIntuitive Surgical$217.58AFMDAffimed$2.91VIRVir Biotechnology$28.87CRSPCRISPR Therapeutics$74.51BioMarin Pharmaceutical (BMRN)
BioMartin Pharmaceutical (NASDAQ:BMRN) specializes in the research and development of therapies for rare diseases. Currently, the company features seven products in its pipeline, with most of them either in Phase 1 or in the preclinical stage.
BioMartin’s flagship product is Valoctocogene Roxaparvovec (BMN 270), an investigational gene therapy under regulatory review for the treatment of severe hemophilia A. Per the company’s website, “Hemophilia A is a genetic disease caused by the deficiency of clotting factor VIII. It is the most common type of hemophilia and occurs much more frequently in males; incidence is estimated at 1 in 4,000-5,000 male births.”
At the moment, BioMarin is considered fairly valued against a basket of valuation metrics. That said, a key highlight for the company’s financials is its balance sheet, particularly a strong Altman Z-Score of 6.38. This rating indicates that BioMarin runs a very small risk of bankruptcy.
Ionis Pharmaceuticals (IONS)
Ionis Pharmaceuticals (NASDAQ:IONS) specializes in discovering and developing RNA-targeted therapeutics. Of course, the broader concept received a much-needed credibility boost from the development and distribution of the coronavirus vaccine from Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA), both of which utilized the messenger-RNA approach.
One of the distinguishing factors about Ionis compared to some other undervalued biotech stocks to buy is its wide footprint. According to its website, Ionis “has more than 40 first-in-class and/or best-in-class medicines designed to treat a broad range of diseases including cancer and cardiovascular, neurological, infectious and pulmonary diseases.”
Against a basket of valuation tools, IONS is considered modestly undervalued. A particular standout in its income statement is a gross margin of 98.5%, which ranks well above the industry median of 61.5%.
Exelixis (EXEL)
Specializing in genomics-based drug discovery, Exelixis (NASDAQ:EXEL) has gained about 9% on a year-to-date basis, a decent start considering the circumstances. The company is perhaps best known for producing Cometriq, a treatment approved by the U.S. Food and Drug Administration for medullary thyroid cancer with clinical activity in several other types of metastatic cancer.
However, not everything in the biotech sector runs smoothly. Recently, Exelixis disclosed some not-so-encouraging news, stating that “its Phase 3 trial for a renal cell carcinoma treatment didn’t demonstrate a significant benefit for overall survival.” Nevertheless, EXEL belongs on this list of undervalued biotech stocks to buy based in part on its robust product pipeline.
Moreover, analysts regard EXEL as significantly undervalued. You can look at Exelixis’ strong balance sheet, with highlights including a cash-to-debt ratio of 31 times, exceeding the industry median of 11.7 times. Also, the company enjoys strong profitability metrics, including a net margin of 19.6%.
Intuitive Surgical (ISRG)
One of the most compelling ideas among undervalued biotech stocks to buy, Intuitive Surgical (NASDAQ:ISRG) develops and manufactures robotics for the purpose of minimally invasive surgery. In particular, the company is best known for its da Vinci Surgical System. Among the myriad benefits of the integration of robotics technology with surgical procedures are better patient outcomes and less time spent in recovery from operations.
According to Allied Market Research, the global minimally invasive surgery market was valued at $60.6 billion in 2020. Experts project that by 2030, the segment will expand to $94.4 billion, representing a compound annual growth rate of 4.7% from 2021 to the end of the forecasted period. It’s quite possible that Intuitive can lead the pack, making ISRG one of the more intriguing undervalued stocks to buy.
Indeed, against a basket of valuation tools, ISRG is significantly undervalued. Both its balance sheet and income statements are incredibly strong. In the former, Intuitive operates a debt-free business. With the latter, its margins are well above the industry median for the medical equipment industry.
Affimed (AFMD)
Affimed (NASDAQ:AFMD) specializes in cancer treatment. By focusing on the potential of the innate immune system, Affimed hopes to unlock profound possibilities. One of its core specialties is the ability to redirect innate cells to recognize and kill tumor cells. Further, this methodology can be tailored to specific patient populations and create powerful monotherapies.
Now, it must be stated that Affimed is so far having a rough time in the market this year, even compared to other embattled names among undervalued biotech stocks to buy. Since the start of January, AFMD has tanked 48%. However, what’s enticing for speculators is recent momentum.
Fundamentally as well, Affimed registers as modestly undervalued. Admittedly, AFMD is a high-risk, high-reward venture. While the company’s balance sheet is reasonably stable, its profitability metrics could use some improvement. Still, the relevance of its business combined with near-term momentum makes it worth a look.
Vir Biotechnology (VIR)
Vir Biotechnology (NASDAQ:VIR) is focused on combining immunologic insights with cutting-edge technologies to treat and prevent serious infectious diseases. Interestingly, Vir uses four platforms — designed to be used individually or in combination with each other — to stimulate and enhance the immune system.
Of course, the Covid-19 pandemic and the myriad iterations of the SARS-CoV-2 virus adds substantial relevance to Vir Biotechnology’s profile. In addition to researching mechanisms to comprehensively address Covid-19, the company is targeting hepatitis B, influenza A and HIV.
Currently, Vir features several products in its pipeline, including several late clinical-stage Covid-19 antibodies. Further, its HIV drug Prophylaxis is in Phase 1 studies, which should garner attention assuming it progresses up the clinical chain.
To be fair, there’s a possibility that VIR is a value trap. However, the company does have solid strengths in its balance sheet. As well, a 10% performance over the trailing month makes it one of the most enticing undervalued biotech stocks to buy.
CRISPR Therapeutics (CRSP)
CRISPR Therapeutics (NASDAQ:CRSP) is on the cutting edge of advanced therapeutics. Specializing in gene-based therapies, CRISPR commands powerful applications across several needs. For instance, its technologies can potentially treat sickle cell disease with gene-edited hematopoietic stem cells. As well, it can pioneer the next generation of cell therapies associated with fighting cancer.
Of course, with such great power comes great controversies. In particular, CRISPR features potential applications in in-vivo therapies, which involve editing cells inside the body to treat genetically defined diseases.
Wherever you stand on the ideological spectrum, CRSP is attractive because it could possibly be one of the undervalued stocks to buy. CRISPR features significant strengths in its balance sheet though its revenue generation is sporadic. However, one last thing to keep in mind is that over the trailing month, CRSP is up 13%.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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