XBI - June's Biotech Boom: 3 Stocks to Buy for a Summertime Surge
2024-06-05 06:14:00 ET
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Wall Street regards the healthcare sector as a constant source of innovation, while biotechnology stands at the pinnacle of groundbreaking medical advancements. The long-term potential of robust biotech stocks to buy remains undeniable for investors. As the summer season kicks in, several biotech companies exhibit characteristics that could ignite this potential summertime surge. Promising clinical trial results, significant product launches, or strategic partnerships could drive this momentum.
We should note that the benchmark S&P 500 index has notably gained nearly 12% year-to-date (YTD). Conversely, the SPDR S&P Biotech ETF (NYSEARCA: XBI ) has underperformed in the broader market, gaining only 1% YTD. This disparity suggests the potential for a catch-up rally within the biotechnology sector. With that information, here are three biotech stocks to buy that could be prime candidates for significant growth in the second half of 2024.
BioMarin Pharmaceuticals (BMRN)
First up on our list of biotech stocks to buy is BioMarin Pharmaceuticals (NASDAQ: BMRN ). This biotechnology company focuses on innovative therapies for rare genetic disorders, specializing in enzyme replacement therapies (ERTs). These therapies address the underlying cause of these conditions by introducing healthy copies of the deficient gene.
BioMarin reported strong financial results for the first quarter of 2024 . Total revenues climbed 9% year-over-year (YOY) to $648.8 million, fueled by a surge in demand for their key drug, Voxzogo. Sales of this therapy skyrocketed 74%, driving higher gross profit margins and a 21% YOY jump in net income to $139.7 million. Furthermore, adjusted diluted earnings per share ( EPS ) rose 18% YOY to $0.71.
Meanwhile, BioMarin presented positive new data supporting the safety and efficacy of Voxzogo at the Pediatric Endocrine Society meeting. In addition, BioMarin’s Phase 3 data confirmed significant gains in annualized growth velocity for achondroplastic children.
So far in 2024, BMRN stock has tumbled more than 22%. The shares are trading at 28.25 times forward earnings and 5.86 times sales. Finally, analysts have a 12-month price target of $110 for BMRN, signaling a 44% upside.
Alnylam Pharmaceuticals (ALNY)
A pioneer in the field of RNA interference (RNAi) therapeutics, Alnylam Pharmaceuticals (NASDAQ: ALNY ) is our next name among the biotech stocks to buy. RNA interference (RNAi) technology offers a revolutionary approach to treating diseases by silencing specific genes contributing to pathological processes. Alnylam employs RNAi to develop therapeutics for diverse cardiovascular, metabolic, infectious and neurological diseases.
In the first quarter of 2024 , Alnylam Pharmaceuticals reported strong financial results. The company achieved $365 million in revenue, marking a 32% YOY growth compared to last year. This growth was primarily driven by a 39% increase in total demand in the U.S., largely due to the strong uptake of Amvuttra, used to treat nerve damage .
Elsewhere, management announced positive results from Alnylam’s Kardia-2 Phase 2 clinical trial evaluating zilebesiran, a potential treatment for hypertension. Investors noted that a single dose of zilebesiran significantly reduced blood pressure in patients with inadequately controlled hypertension.
Despite positive developments, ALNY stock has dropped around 22% YTD and is trading 9.29 times sales. On the other hand, Wall Street has a 12-month median price forecast of $217.5 for ALNY, suggesting more than a 45% upside.
Royalty Pharma (RPRX)
We are completing our discussion of buying biotech stocks at Royalty Pharma (NASDAQ: RPRX ). The company, in part, acts as a financier for developing innovative drugs by providing upfront capital to pharmaceutical and biotechnology companies. In exchange, the company receives future royalty payments based on the product’s sales.
Royalty Pharma reported robust performance in the first quarter of 2024, with Royalty Receipts growing 14% YOY to $705 million. Strong royalties on Evrysdi, Trelegy and the cystic fibrosis franchise drove this growth. However, Portfolio Receipts declined 37% to $717 million, reflecting a $475 million milestone payment received in the first quarter of 2023.
In May 2024, Royalty Pharma acquired an interest in Agios Pharmaceuticals (NASDAQ: AGIO ) royalty on Vorasidenib for $905 million. Vorasidenib is a potential treatment for IDH-mutant glioma, a progressive and incurable brain tumor. Additionally, RPRX partnered with Cytokinetics (NASDAQ: CYTK ) on a $575 million deal. This collaboration includes support for the commercial launch of Aficamten, a heart failure treatment.
So far in 2024, RPRX stock has lost over 2%, while the shares are trading at 9.11 times forward earnings and 7.35 times sales. Finally, analysts have a 12-month price target of $43.05 for RPRX, signaling a 57% upside.
On the date of publication, Tezcan Gecgil 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 .
Tezcan Gecgil, PhD, began contributing to InvestorPlace in 2018. She brings over 20 years of experience in the U.S. and U.K. and has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Publicly, she has contributed to investing.com and the U.K. website of The Motley Fool.
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