3 Biotech Stocks With Promising Pipelines and Big Growth Potential in 2024
· InvestorPlaceWith such a high demand for items that can improve our longevity and health, biotechnology is at the forefront of today’s innovation. Biotech products allow us to better understand the human body and how we can improve functioning within the body. Unsurprisingly, these innovative technologies have developed wide consumer bases. They have also garnered consistent profitability and growth, creating an industry brimming with undercovered gems all investors practically salivate finsihed. This has led to several biotech stocks with promising pipelines.
Over the past five years, the biotech industry has had a CAGR of 7%, and by 2025 the biotech industry is expected to reach a valuation of 725 billion dollars. Of course, although the overall industry is growing quickly, not every individual stock is a prime candidate. As investors, we are always on the lookout to ensure each of our stock picks offers the most enticing and widespread products in today’s market. In this article, we will be highlighting three biotech stocks with promising pipelines and huge growth potential in the coming year.
Novo Nordisk A/S (NVO)
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Novo Nordisk A/S (NYSE:NVO) is a dominant biotech company that has benefited millions of people living with serious chronic diseases. It does so by translating its unmet medical needs into innovative medicines and delivery systems. With such a strong consumer base, Yahoo Finance analysts estimate an optimistic one-year price range between a mean of $84.30 to a high of $125.48.
Looking at its financials, Novo Nordisk has displayed consistent past growth, with a current YoY revenue growth rate of 28.29%. This stands at a ~140% increase compared to its five-year average of 11.81%. Its YoY EBITDA growth rate, similarly, has increased ~138% from the five-year average of 12.14% to the current value of 28.92%.
Not only that, but Novo Nordisk has a lot of potential with the vast quantity of drugs it has in the pipeline. For example, it has two different drugs that have already been filed, one for Diabetes and one for Haemophilia. With an influx of recurring revenue sources here, alongside 10+ more drugs already in stage 3 of testing, NVO is no doubt in a prime position. This is true for any investor who is looking to add a promising biotech stock to their portfolio.
Vertex Pharmaceuticals (VRTX)
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Vertex Pharmaceuticals (NASDAQ:VRTX) is a biotechnology company focused on developing innovative therapies for cystic fibrosis and other serious diseases. The stock is up more than 13% in the past year. Also, Yahoo Finance analysts estimate an average one-year price target of $371.72.
Since its establishment in 1989, the company has developed a wide range of drug offerings in its pipeline. Looking at its more recent R&D pipeline, we see drugs like Ivacaftor in Phase 4 getting ready for regulatory approval to treat symptoms of cystic fibrosis. With the use of CRISPR technology in its development, the company’s commitment to using cutting-edge technology to come up with innovative drugs will no doubt help it expand its consumer base into new demographics. This will also create new sources of recurring revenue. This is one of the top biotech stocks with promising pipelines on the market.
As for its financials, the company has high earnings growth potential, with EPS expected to hit $17.94 by the end of 2025. The company has a CAGR of around 10% from the current EPS of $13.47. There is an EV/EBIT ratio of 17.54 times compared to the sector median of 21.14 times. This means that the company is relatively undervalued and shows promising signs of return over the coming years.
Arcturus Therapeutics Holdings Inc. (ARCT)
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Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT) is a global late-stage clinical mRNA medicines and vaccines company. It is focused on discovering and developing new therapeutics to aid with certain rare diseases. Similar to NVO, Yahoo Finance analysts maintain a promising one-year price range estimate. The estimate is between a mean of $56.31 to a high of $140.00.
Arcturus Therapeutics’s current YoY revenue growth rate stands at an outstanding 475.22%. This is a roughly ~112% increase when compared to its five-year average. Similarly, both its EPS and free cash flow have been climbing upwards. It has been climbing at a rapid rate of 241% and 2000% respectively since 2019.
When we look at Arcturus’s product offerings, we see that it has found its place as a leader in a niche of specialized mRNA therapeutics. Using the LUNAR® platform, it has been targeting diseases from COVID-19 to even Cystic Fibrosis. For example, its ARCT-154 vaccine for COVID-19 has recently been approved by Japan’s Ministry of Health, Labour and Welfare. It has been approved as the first self-amplifying mRNA vaccine, and is bound to garner an even stronger consumer base. With outstanding historic performance and a promising forward-looking pipeline, Arcturus is a great pick for massive upcoming growth. When you start looking into biotech stocks with promising pipelines, start here.
On the date of publication, Ian Hartana and Vayun Chugh did not hold (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.
Chandler Capital is the work of Ian Hartana and Vayun Chugh. Ian Hartana and Vayun Chugh are both self-taught investors whose work has been featured in Seeking Alpha. Their research primarily revolves around GARP stocks with a long-term investment perspective encompassing diverse sectors such as technology, energy, and healthcare.