Biotech stocks operate under a core ethos. While there’s been much talk about financially viable sectors – from tech to cryptocurrencies to even precious metals – when you think about it, nothing is more valuable than one’s health. If you can’t enjoy the fruits of your labor, then your labor will be meaningless. That’s why healthcare as a sector performs so well.
Of course, being tied to a permanently relevant narrative doesn’t guarantee any individual enterprise success. However, one thing is clear. If you’re going to compete in an ecosystem of limited resources, you might as well do so in a burgeoning industry. Whatever might happen in the future, people will prioritize their health. That gives biotech stocks a baseline of fundamental support.
On a quantitative basis, the sector itself is massive and will likely continue expanding. Grand View Research points out that the global biotech industry reached a market size of $1.55 trillion. By 2030, the sector could be worth $3.88 trillion, implying a compound annual growth rate (CAGR) of 13.96%.
That’s enough reason to at least research this arena. With that, below are biotech stocks to consider.
Bristol-Myers Squibb (BMY)
Bristol-Myers Squibb (NYSE:BMY) offers myriad specialties, being one of the world’s top biotech stocks. However, it commands significant relevance in the field of oncology. It offers a wide range of cancer treatments, such as Opdivo, a treatment for skin cancer. Presently, the global oncology market size is valued at $222.36 billion. By 2033, the sector could hit $521.6 billion, implying a CAGR of 8.9%.
That’s significant because of covering experts’ projections for BMY stock. For fiscal 2024, Wall Street is targeting sales of $46.08 billion. If so, that would imply an upside of 9.6% from last year’s tally of $46.88 billion. Further, the most optimistic revenue target calls for $46.88 billion.
These aren’t unreasonable targets considering that aside from a miss in the second quarter of 2023, BMY has been consistently exceeded analysts’ bottom-line targets. What’s even more enticing, shares are trading hands at 1.86X trailing-year sales. That’s much lower than what we saw in calendar Q2 of last year, when this metric reached 2.98X.
True, analysts rate shares a consensus hold. However, the average price target comes in at $52.46, implying over 27% upside potential.
Neurocrine Biosciences (NBIX)
Neurocrine Biosciences (NASDAQ:NBIX) focuses its research and development on neurological and endocrine-related disorders. It’s one of the more compelling ideas among biotech stocks thanks to the underlying relevance. In particular, the global neurological disorder therapeutics market size may reach a valuation of $66.4 billion this year. By 2033, the sector could land at $103.8 billion.
If that turns out to be the case, the category would see a CAGR of 5.1% during the forecast period. That’s enticing for NBIX stakeholders because covering experts anticipate a much greater business expansion for Neurocrine. By the end of fiscal 2024, earnings per share may reach $4.07, implying expansion of nearly 65%. On the top line, sales could hit $2.22 billion, up 17.7% from last year’s haul of $1.89 billion.
To be fair, NBIX doesn’t come cheap. Right now, shares trade at 7.01X trailing-year revenue. About a year ago during calendar Q2, the metric came in at 5.83X. Nevertheless, Neurocrine could be worth its premium as it’s projected to significantly outpace the performance of the underlying subsector.
Amgen (AMGN)
One of the top-tier biotech stocks with a market capitalization of over $160 billion, Amgen (NASDAQ:AMGN) is no stranger to healthcare innovations. In particular, investors are intrigued with AMGN stock for its wide range of immunology-focused therapies. According to Precedence Research, the global immunology market size reached a valuation of $98.22 billion last year. That’s a massive market and it’s likely to get bigger.
By 2033, the sector could be worth $263.22 billion. If so, that would imply a CAGR of 10.36%. What’s enticing about Amgen is that covering experts believe the business could outrun its mainline category. For fiscal 2024, they’re expecting EPS to hit $19.46, up 11.7% from last year’s print of $17.42. On the top line, sales could rise to $33 billion, implying an expansion of over 25%.
What’s more, it’s possible for sales to reach just under $34 billion if the stars align right. That wouldn’t be unexpected. In the past four quarters, Amgen’s average EPS hit $4.58. This performance translated to an earnings beat of 5.55%. Over the long run, it’s a strong candidate for biotech stocks to buy.
Gilead Sciences (GILD)
Gilead Sciences (NASDAQ:GILD) covers multiple diseases and conditions. However, it’s perhaps best known for its innovations targeting infectious diseases. According to Grand View Research, the global infectious disease therapeutics market size reached a valuation of $67.1 billion in 2022. Experts believe that between 2023 to 2030, the space could expand at a CAGR of 7.1%.
At the forecast culmination point, the industry could generate revenue of $115.2 billion. Still, even with the mature business that Gilead represents, it can still outpace the underlying ecosystem. Analysts are forecasting that fiscal 2024 sales may reach $27.59 billion on average. If so, that would translate to an 8.9% lift from last year’s tally of $25.33 billion. Also, the blue-sky sales target calls for $28.06 billion.
To be fair, Gilead’s earnings performances have been all over the map. The average EPS in the past four quarters came out to 98 cents. In terms of average earnings beat, the figure sat at 2.65%. Still, investors shouldn’t overlook the passive income.
Right now, the company offers a forward dividend yield of 4.73%. It may be something to look into.
Novartis (NVS)
Novartis (NYSE:NVS) ranks among the biggest powerhouse biotech stocks. Based in Switzerland, the multinational pharmaceutical firm features a market cap of $230.22 billion. While the company covers a broad range of medical solutions, it’s well known for its cardiovascular treatments. Currently, the global cardiovascular drugs market size is worth around $138 billion. By 2032, the sector could hit $200.9 billion.
If the projections hold true, the expansion would imply a CAGR of 3.8%. The beauty of NVS stock is that the underlying enterprise could easily outpace this mainline ecosystem. For fiscal 2024, analysts are targeting EPS to reach $7.29, up 5.65% from last year’s result of $6.90. On the top line, sales could hit $49.25 billion, up 8.4% from 2023’s print of $45.44 billion.
Notably, the blue-sky target lands at $50.41 billion. Despite much enthusiasm for Novartis, the reality is that it commands a premium valuation. Presently, shares trade at 4.6X trailing-year sales. However, it’s not that much of an increase from Q2 2023’s average multiple of 4.19X. Therefore, investors ought to keep NVS on the radar of potential biotech stocks to buy.
bluebird bio (BLUE)
One of the riskier ideas among biotech stocks to buy, bluebird bio (NASDAQ:BLUE) carries a market cap of less than $183 million. As you might imagine, shares are all over the map. They’re also down nearly 35% on a year-to-date basis. Still, if you want to take a risk in the exciting gene therapy space, BLUE stock presents significant upside potential.
First, let’s talk about the industry. The global gene therapy market size reached a valuation of $8.75 billion in 2023. By 2033, the sector could hit a valuation of $52.4 billion, implying a CAGR of 19.6%. That’s a blistering pace but bluebird can potentially beat it, especially because of where it sits in its business cycle.
For fiscal 2024, analysts anticipate that sales could hit $35.3 million. If so, that would imply an 881.4% skyrocketing from last year’s print of $3.6 million. As a diminutive enterprise, Bluebird enjoys bonkers potential. Therefore, the growth forecast isn’t out of the realm of reality.
At a trailing-year sales multiple of 4.48X, BLUE stock isn’t cheap. Still, if the company meets the projected sales target, BLUE might be relatively undervalued.
Ultragenyx Pharmaceutical (RARE)
As you might guess from its ticker symbol, Ultragenyx Pharmaceutical (NASDAQ:RARE) specializes in the rare disease therapeutics field. Given the difficulties in addressing diseases in this sector, it’s a high-risk sector. Of course, it can potentially yield big gains. Per Grand View Research, the global space reached a valuation of $119.6 billion in 2021. Between 2022 and 2030, the expectation calls for a CAGR of 12.8%.
By the end of the forecast period, the category could be worth $335.84 billion. With RARE featuring a market cap of $3.25 billion, you can begin to see the opportunity here. More importantly, analysts are looking for fiscal 2024 revenue to land at $513.54 million. If so, that would imply an 18.3% lift from last year’s print of $434.25 million.
In addition, fiscal 2025 sales could fly up to $621.08 million. And that year’s blue-sky target calls for $748 million. Should Ultragenyx fire on all cylinders, it can easily outpace the underlying sector.
In fairness, RARE stock is not cheap at 6.8X trailing-year sales. However, it’s at a relative discount compared to Q2 2023’s average metric of 8.43X. For risk takers, it’s one of the biotech stocks to buy.
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.
