Biotechnology is one of the most exciting and innovative sectors in the market, offering investors the potential for high returns coupled with groundbreaking discoveries. However, due to regulatory hurdles, clinical failures and intense competition, biotech investing also comes with high risks. Therefore, it is important to pick quality biotech stocks that have a competitive edge, solid financial position and clear growth strategy.
Below are three biotech stocks that fit these criteria. These potentially great buys should encourage you to continue adding shares to your portfolio at each and every opportunity.
Novo Nordisk (NVO)
Novo Nordisk (NYSE:NVO) is a Danish biopharmaceutical company that specializes in diabetes care, obesity treatment and rare blood and endocrine disorders. The company has a global dominant market share in insulin of over 40%. Novo Nordisk also has a strong pipeline of innovative products, such as semaglutide, a once-a-week injectable drug that can treat both type 2 diabetes and obesity. The pharmaceutical company’s most recent semaglutide innovation has been Wegovy, which has been approved as a “weight management” drug in the U.S., E.U., U.K. and Canada but is awaiting further approval in other regions. The oral semaglutide has shown impressive results in clinical trials, reducing body weight by up to 20% in obese patients.
Novo Nordisk has a solid financial position, with revenue of $25.5 billion and net income of $7.9 billion in 2022. Strong demand for its drugs has also resulted in the company beating Wall Street’s Q1 2023 revenue estimates. In the first quarter, Novo Nordisk generated $7.7 billion in revenue, up nearly 27% year-over-year. Most Wall Street analysts remain bullish on Novo Nordisk, with an average price target of $172.38, implying a 5.6% upside from its current price of $162.07.
Vertex Pharmaceuticals (VRTX)
Vertex Pharmaceuticals (NASDAQ:VRTX) is a U.S.-based biotechnology company that focuses on developing and commercializing therapies for cystic fibrosis (CF), a rare genetic disease that affects the lungs and other organs. Thus far, Vertex has several approved drugs for CF. Trikafta is the most recent and successful drug, as it can treat up to 90% of CF patients with at least one copy of the F508del mutation, the most common cause of the disease. Trikafta generated $7.7 billion in sales in 2022, accounting for 86% of Vertex’s total revenue.
Vertex has an overall robust financial position, with revenue of $8.9 billion, representing an 18% YoY increase and net income of $3.3 billion, representing an impressive 37.1% net margin in 2022. The pharmaceutical company also surpassed Wall Street’s expectations on its Q1’2023 earnings print, sending shares to new heights. VRTX shares are up nearly 25% year-to-date. The company also has a strong balance sheet, with $9.4 billion in cash and equivalents and $789 million of lease liabilities as of March 31, 2023. Vertex expects to grow its product revenue by 7-9% in 2023.
Genmab (GMAB)
Genmab (NASDAQ:GMAB) is a Danish biotechnology company that develops antibody-based therapies for cancer and other diseases. The company has several approved drugs, including Darzalex, a treatment for multiple myeloma, and Kesimpta, a treatment for relapsing forms of multiple sclerosis. Darzalex is Genmab’s flagship product and generated $7.9 billion in cumulative net sales as of 2022, of which Genmab received more than $1 billion in royalties from its partner Johnson & Johnson (NYSE:JNJ). Kesimpta is a newer product, launched in August 2020 by Genmab’s partner Novartis (NYSE:NVS). Genmab reported to have generated more than $1 billion in revenue from Kesimpta sales in 2022.
Genmab has a healthy financial position, with revenue of $2.1 billion and net income of $795 million in 2022. The company also has a sizable cash pile, with $3.5 billion in cash and equivalents and no debt as of March 31, 2023. Genmab expects to grow its revenue by approximately 10% in local currencies in 2023. Wall Street analysts are positive on Genmab’s outlook, with an average price target of $42.26, indicating a 6.23% upside from its current price of $39.78.
On the date of publication, Tyrik Torres 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.
