Biotechnology is one field that has largely remained unaffected by positive and negative sentiment that governs the stock market. Most biotech stocks have maintained a wide competitive moat in the market and have an aggressive beta making them lucrative investment ventures for shareholders who plan to reap higher returns on their investments. In this article, I have chosen five leading biotech stocks that have shown greater resilience in predominantly negative market conditions, announced newer acquisitions to increased favorable investor sentiment, and launched a new range of innovative products to achieve a greater market share.
BioMarin Pharmaceutical Inc. (BMRN)
BioMarin Pharmaceutical is a California-based biotechnology firm with offices and research facilities spread across North America, South America, Asia and Europe. The core business and research of this company, and the major source of generating revenue, is through enzyme replacement therapies. Because of such a unique product portfolio, the company has traditionally maintained a wide competitive moat that, along with a dividend yield of nearly 3%, has allowed it favorable investor sentiment over the last three fiscal quarters. BioMarin has an aggressive beta of nearly 1.2% which has allowed it to gain more in the favorable positive market conditions that have encouraged market activity lately. The business has a total market capitalization of nearly $4.5 billion with an average trading volume of more than $1 million. Trading price of the stock is currently poised at around $36 although it has gone as high as $39 in the past few weeks amidst aggressive trading. Success in the recently announced initiation of the first phase trials for BMN-111 could pave the way for higher growth levels and greater market share. I believe that, with recent financial indicators and market conditions conducive of trade, the business has a lot of potential for higher growth and increased profitability.
Seattle Genetics Inc. (SGEN)
Seattle Genetics is among the handful of Biotechnology companies that were reported to fare well in 2011. With a market capitalization of more than $2 billion, the business has an average trading volume of nearly $1.5 million. The trading price of stock is currently poised at around $17 although a short period of restricted market activity caused the stock to plummet to nearly $12. Seattle Genetics performed especially well in the last quarter of 2011 as a result of favorable investor sentiment and positive financial indicators. The company has recently announced initiation of phase 2 clinical trial of ADCETRIS the successful completion of which is expected to reflect positively on the company's financial performance and help it widen its competitive moat. Seattle Genetics has a beta of around 1.05 which means that the business has the capacity to reap greater profits and offer greater rewards o investors in the event of an upswing in economic activity or favorable market conditions. I rank the business as a buy seeing how well the business has performed in recent quarters.
Exelixis Inc. (EXEL)
Exelixis is a genomics-based drug research company with its headquarters in Southern San Francisco. It generally earns its revenues by investing in research and development operations for anti-cancer therapies. After a downward trend in the opening fiscal quarters of 2011, Exelixis recorded steady gains in the fourth quarter with realized revenues exceeding $93 million. Compared to the revenues recorded in the same period for the previous year, the business recorded revenue growth of more than 110%. Exelixis has started the new year well with aggressive market activity pushing up the trading price of stock to almost $6 after it plummeted down to nearly $3. The business has a market capitalization of nearly $900 million and average trading volume is a little less than $2 million. On a price to earnings ratio of 10.25, the business has earnings per share of nearly 56c. The company has recently announced pricing $60.5 million public offering of common stock which is expected to reflect well on investor sentiment and lead to more positive market conditions for the business. Market players seeking to make large investments for relatively short terms can benefit by investing in the business as it has an aggressive beta of more than 2 meaning that the business can offer higher profits and earn greater revenues in the event of a sudden upturn in market conditions. Although financial reports for the major part of last year may not reflect the business' potential for growth, I believe that Exelixis can prove to be a more lucrative investment venture for investors seeking higher gains in a short period of time.
Celldex Therapeutics (CLDX)
Celldex Therapeutics develops immuno-therapies to treat specific forms of cancer, autoimmune diseases, and infections. With a market capitalization of nearly $225 million and an average trading volume of more than 466,000, Celldex is among the few biotech companies that have been able to perform well in recent fiscal quarters. After slumping down to nearly $2, the stock has gained remarkably amidst positive investor sentiment and renewed market activity to push the stock price above $4. Celldex has traditionally enjoyed favorable investor sentiment even during relatively negative market conditions largely because of a beta of more than 1.6. This means that, at times of positive economic environment and during favorable market conditions, the business has the ability to reap higher profits and offers greater returns on investment to investors. I believe that the business has great potential for growth this year largely due to continued research in innovative new therapies. I rate Celldex as a buy for the current year.
Alere Inc. (ALR)
Alere provides professional as well as consumer diagnostic tests along with a wide range of health management services. Its professional diagnostic products include tests for cancers, cardiovascular disease, drugs of abuse, infectious diseases, and women's health including pregnancy tests and fertility monitors. With a market capitalization of nearly $2.5 billion and average trading volume of almost $0.7 million, Alere is ranked among the largest and most lucrative biotech businesses currently listed on the stock. The company reported profits of nearly $586 million in the third quarter of 2011 which was substantially higher than previous third quarter earnings of $539 million for 2010. Moreover, fourth quarter net revenues were reported to be nearly $653 million compared to $578 million for third quarter earnings recorded in 2010. Trading price of the stock is currently poised at around $26 although the stock plummeted to as low as $17 recently amidst slow market activity and renewed skepticism among investors owing to unfavorable market sentiment. With a beta of nearly 1.55%, Alere currently enjoys favorable investor sentiment largely because at times of positive economic environment, or during favorable market conditions, the business has the ability to reap higher profits and offer higher returns on investment as compared to other businesses. Looking at the leading financial indicators for recent fiscal quarters and current market condition, I believe that Alere Inc. will continue to grow at a steady rate in 2012.