The general biotechnology industry offers gurus many opportunities to increase their portfolio returns. Several biotech stocks, including Gilead Sciences Inc. (GILD, Financial) and Celgene Corp. (CELG, Financial), have positive financial outlooks.
Firms in the biotechnology industry manufacture products and modify processes using technological applications involving biological systems. For example, Gilead Sciences, incorporated in Delaware on June 22, 1987, seeks to improve patient care involving several life-threatening diseases, including AIDS, hepatitis B and C and cardiovascular diseases. The research-based biopharmaceutical firm has commercial sales operations both domestically and globally, with market subsidies in several European and Asian countries.
With a financial strength rating of 8 out of 10, Gilead Sciences has a healthy and profitable outlook. The firm has a return on invested capital of 76.63%, and the company’s operating margin, ROE and ROA are higher than 98% of stocks in the biotechnology industry. Although Gilead has relatively high P/E and P/S ratios, these valuation ratios are near 10-year lows. Furthermore, Gilead’s P/B ratio is lower than 82% of global biotechnology stocks.
Like Gilead Sciences, Celgene develops and commercializes products to improve patient care. Incorporated in Delaware, Celgene focuses on cancer-treating therapies and research leading to newer therapies targeting protein homeostasis and other cancer-preventing treatments.
Celgene also has a financial strength rating of 8 out of 10. The company’s ROE is higher than 96% of biotechnology stocks, and the company’s P/B ratio is lower than 92% of stocks in the global biotechnology industry. Celgene’s operating margin is higher than 89% of all general biotechnology stocks, and the company’s trailing 12-month P/E is lower than 67% of stocks in the global biotechnology industry. P/S ratios for Celgene are near three-year lows, and the firm’s operating margin is expanding.
As these two biotechnology companies have positive financials, many gurus bought or increased their positions in these stocks. Leon Cooperman of Omega Advisors bought 516,989 shares of Gilead Sciences in the first quarter, increasing his portfolio by 1.26%. On the same day, Jerome Dodson of the Parnassus Fund increased his position in Gilead Sciences by 55%.
Three gurus bought Celgene shares in the first quarter: Julian Robertson of Tiger Management (228,840 shares), Joel Greenblatt of Gotham Asset Management (68,917 shares) and Ray Dalio of Bridgewater Associates (4,100 shares). Lee Ainslie of Maverick Capital doubled his position in Celgene, adding 105.88% of the stock to his portfolio.
See also: Competitive Comparison of Giliad Sciences
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