With the rapidly increasing drug discovery and sequential approvals, surging R&D initiatives, coupled with recent Fed rate cuts likely to encourage funding and investing, the biotech industry is positioned to experience solid growth. Also, advancements in technologies are swiftly accelerating the prospects of the market.

Given the industry’s positive prospects, it could be ideal to invest in fundamentally strong biotech stocks Amgen Inc. (AMGN), Regeneron Pharmaceuticals, Inc. (REGN), and Gilead Sciences, Inc. (GILD) with promising pipelines.

The role of the biotech industry in today's generation is continuously expanding with increasing incidents of chronic diseases and conditions, rising demand for personalized medicine, and rapid acceleration in drug discovery fueled by the application of cutting-edge technologies like Artificial Intelligence (AI).

Over 38 new drugs have been approved by the U.S. Food and Drug Administration (FDA) this year to address conditions such as schizophrenia, urinary tract infections, breast cancer, and lung cancer and to treat Alzheimer’s disease. The increased drug discovery and intense research and development (R&D) will potentially accelerate further breakthroughs.

Also, the biotech industry is poised to capitalize on the Federal Reserve’s recent interest rate cut. The rate cut resulted in lower borrowing costs. It could potentially lead to increased investment and improve the market sentiment.

Moreover, the global biotechnology market is expected to reach $4.61 trillion by 2034, growing at a CAGR of 11.5%. The U.S. biotechnology market is predicted to be worth around $830.31 billion by 2034. Strong R&D initiatives, increasing drug approvals, and improvement of healthcare infrastructure are driving the market growth.

Further, the increasing application of generative AI in Biotech to design novel molecules, proteins, and drugs is revolutionizing the drug discovery and development processes. With this accelerating innovation and drug candidate identification, the generative AI in the biotech market is expected to grow to $472 million by 2032 at a CAGR of 24.9%.

Considering the encouraging economic trends, let’s delve into the fundamentals of the top three Biotech stocks, beginning with the third choice.

Stock #3: Amgen Inc. (AMGN)

AMGN discovers, develops, manufactures, and delivers human therapeutics globally. The company's principal products include Enbrel, Otezla, Prolia, XGEVA, Repatha, Nplate, KYPROLIS, Aranesp, EVENITY, Vectibix, BLINCYTO, TEPEZZA, and KRYSTEXXA.

On August 20, AMGN announced the availability of Otezla® (apremilast) in the U.S. for pediatric use. The U.S. FDA approved Otezla earlier this year for treating moderate to severe plaque psoriasis in children and adolescents ages 6 and older who weigh at least 20 kg (44 lb) and are candidates for phototherapy or systemic therapy.

This is currently the first and only FDA-approved oral medication for children and adolescents ages 6-17 with moderate to severe plaque psoriasis.

On June 14, AMGN announced that the FDA approved BLINCYTO to treat adult and pediatric patients one month or older with CD19-positive Philadelphia chromosome-negative B-cell precursor acute lymphoblastic leukemia in the consolidation phase.

BLINCYTO is the first and only globally approved Bispecific T-cell Engager (BiTE®) immuno-oncology therapy that targets CD19 surface antigens on B cells. It demonstrated superior overall survival versus chemotherapy alone.

During the third quarter that ended September 30, 2024, AMGN reported total revenues of $8.50 billion, up 23.2% year-over-over. Its non-GAAP operating income grew 18.8% from the year-ago value to $4.04 billion. The company’s non-GAAP net income and EPS amounted to $3.02 billion and $5.58, indicating increases of 13.4% and 12.5% from the prior year’s quarter, respectively.

Furthermore, the company’s free cash flow rose 32% from the prior year period to $3.30 billion.

For the full year 2024, AMGN expects total revenues in the range of $33 billion to $33.80 billion and non-GAAP EPS in the range of $19.20 to $20.00.

Analysts expect AMGN’s revenue and EPS for the fourth quarter (ending December 2024) to grow 8.2% and 8.3% year-over-year to $8.87 billion and $5.10, respectively. Also, the company topped the consensus EPS and revenue estimates in three of the four trailing quarters.

Shares of AMGN have surged 16.9% over the past six months and 25.2% over the past year to close the last trading session at $320.16.

AMGN’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

AMGN has a B grade for Quality. It is ranked #25 out of 329 stocks in the Biotech industry.

In addition to the POWR Ratings we’ve stated above, we also have AMGN ratings for Value, Momentum, Stability, Growth, and Sentiment. Get all AMGN ratings here.

Stock #2: Regeneron Pharmaceuticals, Inc. (REGN)

REGN discovers, invents, develops, manufactures, and commercializes medicines for treating various diseases worldwide. The company's products include EYLEA injection, myopic choroidal neovascularization, diabetic retinopathy, neovascular glaucoma, and retinopathy of prematurity.

On October 18, REGN announced positive three-year data for EYLEA HD® (aflibercept) Injection 8 mg from an extension study of the Phase 3 PHOTON trial in patients with diabetic macular edema (DME). Patients who switched to EYLEA HD experienced substantially slower fluid reaccumulation.

The phase 3 PHOTON trial continued to demonstrate that EYLEA HD can safely provide meaningful and lasting vision and anatomical benefits for people living with diabetic macular edema and can prove to be revolutionary for the patients.

On September 27, REGN and Sanofi received FDA approval for Dupixent® (dupilumab) as an add-on maintenance treatment for adults with inadequately controlled chronic obstructive pulmonary disease (COPD) and an eosinophilic phenotype. This marked Dupixent as the first biological medicine approved in the U.S. to treat these patients.

During the third quarter that ended September 30, 2024, REGN’s revenues increased 10.6% year-over-year to $3.72 billion. Its income from operations increased 6.2% from the year-ago value to $1.18 billion. The company’s non-GAAP net income came in at $1.46 billion or $12.46 per share, indicating growth of 10% and 7.5% year-over-year, respectively.

Street expects REGN’s revenue for the first quarter (ending March 2025) to increase 16.4% year-over-year to $3.66 billion, while its EPS is expected to grow 19.7% year-over-year to $11.43, respectively. Furthermore, the company surpassed the consensus revenue and EPS estimates in three of the trailing four quarters.

REGN’s stock has gained 7.5% over the past year to close the last trading session at $838.20.

REGN’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.

The stock has a B grade for Value and Quality. REGN is ranked #9 among 329 stocks in the Biotech industry.

Click here to access REGN’s ratings for Momentum, Growth, Stability, and Sentiment.

Stock #1: Gilead Sciences, Inc. (GILD)

GILD is a biopharmaceutical company that discovers, develops, and commercializes medicines in the areas of unmet medical needs internationally. The company provides products like Biktarvy, Genvoya, Descovy, Odefsey, Truvada, Complera/ Eviplera, Stribild, Sunlencs, and Atripla.

On October 31, GILD and AbTherx, a biotechnology company with innovative technologies, expanded their previous agreement to develop novel antibody discovery technologies and discover therapeutic antibodies for Gilead-selected targets. The expanded partnership will include additional technologies and multiple new research programs.

On October 02, GILD entered into a non-exclusive, royalty-free voluntary licensing agreement with Hetero, India's leading pharmaceutical company, to manufacture and distribute lenacapavir in 120 countries. The strategic agreement is in line with GILD’s vision and will broaden access to lenacapavir, the innovative HIV treatment used in combination with other antiretroviral.

The partnership will aid the efforts to prevent HIV through pre-exposure prophylaxis (PrEP).

During the second quarter that ended June 30, 2024, GILD’s total revenues were up 5.4% year-over-year to $6.95 billion, and its operating income grew 58.8% from the prior year quarter to $2.64 billion. Also, the company’s non-GAAP net income and EPS totaled $2.52 billion and $2.01, up 49.2% and 50% from the prior year’s quarter, respectively.

As per the company’s full-year guidance, GILD projects product sales to range between $27.10 billion and $27.50 billion. It also expects non-GAAP EPS to be between $3.60 and $3.90, an increase from the previous $3.45 to $3.85 guidance.

Street expects GILD’s revenue for the fiscal year (ending December 2025) to increase 1.1% year-over-year to $28.05 billion, and its EPS for the same period is expected to grow 91.9% year-over-year to $7.26. Also, the company surpassed the consensus revenue estimates in all trailing four quarters, which is impressive.

GILD’s stock has gained 36.2% over the past six months and 13.1% over the past year to close the last trading session at $88.82.

GILD’s POWR Ratings reflect its robust outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.

The stock has an A grade for Value. It also has a B grade for Sentiment and Quality. Within the same industry, GILD is ranked #3 among 329 stocks.

Click here to access additional ratings of GILD for Momentum, Growth, and Stability.

What To Do Next?

43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.

2024 Stock Market Outlook >

AMGN shares were unchanged in after-hours trading Friday. Year-to-date, AMGN has gained 13.28%, versus a 21.27% rise in the benchmark S&P 500 index during the same period.

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.

More...