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3 Biotech Stocks to Buy and Hold for the Next 20 Years

The biotech industry is well-positioned for long-term growth owing to strong demand and continued breakthroughs. Furthermore, favorable government funding should boost the industry’s growth. Hence, it could be wise to buy and hold fundamentally sound biotech stocks Amgen (AMGN), Biogen (BIIB), and Amicus Therapeutics (FOLD) for the next two decades. Continue reading…

The biotech industry has witnessed significant growth in recent years, primarily driven by sustained demand amid an increasing prevalence of chronic diseases and an aging population. The COVID-19 pandemic has further catalyzed the industry with enormous breakthroughs. Several biotech companies raced to develop new therapies and vaccines to address the global health crisis.

Increased production of personalized medicine, growing federal investments, tech improvements, and increasing drug formulations reflect the biotech industry’s bright prospects. Last year, President Biden signed an Executive Order to launch a National Biotechnology and Biomanufacturing Initiative to advance the U.S. biotech sector.

The global biotechnology market is expected to grow at a 13.9% CAGR to reach $3.88 trillion by 2030. Moreover, investors’ interest in biotech stocks is evident from the ETFis Series Trust I - Virtus LifeSci Biotech Products ETF’s (BBP) 18.1% returns over the past year.

Therefore, investors could capitalize on the industry tailwinds by buying and holding quality biotech stocks Amgen Inc. (AMGN), Biogen Inc. (BIIB), and Amicus Therapeutics, Inc. (FOLD) for the long term.

Amgen Inc. (AMGN)

AMGN discovers, manufactures, and distributes a diverse range of human therapeutics for treating chronic diseases in oncology/hematology, cardiovascular, and neuroscience. The company uses both direct-to-consumer channels and pharmaceutical wholesale distributors to distribute its products.

On December 12, 2022, AMGN announced that Pillartree Ltd, a newly established company owned by AMGN, made a recommended cash offer for Horizon Therapeutics PLC. The acquisition values the company's entire issued and to-be-issued ordinary share capital at approximately $27.8 billion on a fully diluted basis, implying an enterprise value of about $28.3 billion.

By adding a complementary portfolio of therapeutics from Horizon, the acquisition is anticipated to boost AMGN's portfolio of best-in-class novel treatments, produce robust cash flow, and speed up revenue growth.

On the same day, the company declared a $2.13 per share dividend for the first quarter of 2023, payable on March 8, 2023, to all stockholders of record on February 15, 2023. This represents a 10% increase over what was paid in each of the four prior quarters.

AMGN has raised its dividends for 11 consecutive years. It pays an annual $8.52 per share dividend, which translates to a 3.54% yield on the current price level. Its dividend payments have grown at a 10.8% CAGR over the past five years, and its four-year average dividend yield is 2.88%.

For the fiscal fourth quarter that ended December 31, 2022, AMGN’s product sales grew 4.5% year-over-year to $6.55 billion. Its non-GAAP operating income increased marginally from the year-ago value to $3.01 billion. In addition, as of December 31, 2022, AMGN’s total current assets stood at $22.19 billion, up 14.4% year-over-year.

The consensus revenue estimate of $26.71 billion for the fiscal year (ending December 2023) indicates a 1.5% year-over-year improvement. The consensus EPS estimate of $17.84 for the ongoing year reflects a marginal rise from the prior year. Moreover, AMGN surpassed its consensus estimates in three of four trailing quarters, which is impressive.

In addition, the consensus revenue and EPS estimate of $28.01 billion and $18.82 for fiscal 2024 indicate an improvement of 4.9% and 5.5% year-over-year, respectively. Shares of AMGN have gained 7.6% over the past year to close the last trading session at $238.24.

AMGN’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

The stock has an A grade for Quality and a B for Value and Stability. In the 408-stock Biotech industry, it is ranked #15.

Beyond what we stated above, we also have AMGN’s Growth, Momentum, and Sentiment ratings. Get all AMGN ratings here.

Biogen Inc. (BIIB)

BIIB discovers, develops, and delivers therapies to people with severe and complex diseases. Its medicine portfolio includes treatments for Alzheimer's disease, spinal muscular atrophy, and multiple sclerosis (MS). It is focused on advancing its pipeline in neurology, neuropsychiatry, specialized immunology, and rare diseases. 

On February 6, 2023, BIIB and Sage Therapeutics, Inc. (SAGE) announced that the U.S. Food and Drug Administration (FDA) had accepted zuranolone's New Drug Application (NDA) for the treatment of the major depressive disorder (MDD) and postpartum depression (PPD).

With depression being one of the top contributors to disability worldwide, BIIB believes that if approved, zuranolone would have the potential to be a valuable new alternative that could address the significant unmet need posed by the diverse populations suffering from MDD and PPD.

Moreover, on January 4, BIIB and Alcyone Therapeutics (Alcyone) entered a licensing and collaboration agreement to develop Alcyone's ThecaFlex DRx™ System, an implantable medical device intended for subcutaneous delivery of antisense oligonucleotide (ASO) therapeutics into the intrathecal space.

BIIB hopes to leverage the ThecaFlex System to enhance patient treatment outcomes for patients with neurological illnesses.

In the fiscal fourth quarter that ended December 31, 2022, BIIB’s income before income tax expense and equity in loss of investee, net of tax, rose 49.1% year-over-year to $603.80 million. Also, non-GAAP net income attributable to BIIB came in at $587.20 million, up 17.3% from the prior year’s period, while non-GAAP EPS grew 19.5% year-over-year to $4.05.

Analysts expect BIIB’s EPS to increase 5.1% year-over-year to $16.25 for the fiscal year ending December 2024. Moreover, the company surpassed its consensus estimates in three of four trailing quarters. The stock has gained 30.9% over the past six months to close the last trading session at $271.93.

BIIB’s strong fundamentals are apparent in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.

BIIB has an A grade for Value and a B for Quality and Growth. Within the Biotech industry, it is ranked #6 of 408 stocks.

In addition to the POWR Ratings I’ve just highlighted, you can see BIIB ratings for Stability, Sentiment, and Momentum here.

Amicus Therapeutics, Inc. (FOLD)

FOLD discovers, develops, and sells medications for rare diseases. Its product portfolio comprises a rare illness gene therapy, a novel therapeutic paradigm for Pompe disease, and oral precision medicine for adults diagnosed with Fabry disease.

On December 16, 2022, FOLD announced that the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) adopted a favorable opinion recommending marketing authorization of cipaglucosidase alfa, a long-term enzyme replacement therapy (ERT) for adults with late-onset Pompe disease (LOPD).

LOPD is a rare, debilitating, and potentially life-threatening lysosomal disorder. The favorable CHMP opinion for cipaglucosidase alfa is a remarkable achievement and a substantial step toward improving patient care. This initiative could strategically benefit the company.

For the fiscal 2022 third quarter that ended September 30, FOLD’s net product sales increased 2.7% year-over-year to $81.69 million, while its gross profit marginally grew from the year-ago value to $68.26 million. Furthermore, as of September 30, 2022, the company’s cash and cash equivalents stood at $277.59 million, compared to $245.20 million as of December 31, 2021.

The consensus revenue estimate of $328.90 million for the fiscal year (ended December 2022) indicates a 7.7% improvement from the previous year. Likewise, the revenue estimate of $402.60 million for the current fiscal year (ending December 2023) indicates a 22.4% year-over-year improvement.

Shares of FOLD have gained 48.1% over the past year to close the last trading session at $12.88.

FOLD’s POWR Ratings reflect its solid prospects. The stock has an overall rating of B, equating to Buy in our proprietary rating system.

The stock has a B grade for Value and Quality. Within the same industry, it is ranked #31 of 408 stocks.

To see additional POWR Ratings for Stability, Growth, Sentiment, and Momentum for FOLD, click here.

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AMGN shares were trading at $237.95 per share on Wednesday morning, down $0.29 (-0.12%). Year-to-date, AMGN has declined -8.60%, versus a 4.41% rise in the benchmark S&P 500 index during the same period.

About the Author: Aanchal Sugandh

Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.


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