The pharmaceutical sector is expanding due to advanced technologies such as AI and new drug discoveries. Given the industry’s growth prospects, fundamentally strong pharma stocks Kamada Ltd. (KMDA), Voyager Therapeutics, Inc. (VYGR) and OptiNose, Inc. (OPTN) might be worth buying.
Before delving deeper into their fundamentals, let’s discuss what’s happening in the pharma industry.
The pharmaceutical industry is poised for long-term growth due to rising demand for drugs and therapies, significant investments in R&D and enhanced manufacturing capabilities.
Generative AI is transforming the pharmaceutical sector by speeding up drug development, improving clinical trials, streamlining regulatory approvals, and creating customized marketing and medicinal materials. According to McKinsey Global Institute, technology could generate $60 billion to $110 billion annually in the pharmaceutical and medical-product industries by expediting medication discovery, development, approval, and marketing.
The US pharmaceutical market is expected to reach $802.80 billion by 2028, exhibiting a CAGR of 6%. In addition, investors’ interest in pharmaceutical stocks is evident from the VanEck Pharmaceutical ETF’s (PPH) 13% returns over the past three months.
Considering these conducive trends, let’s look at the fundamentals of the three Medical – Pharmaceuticals stocks, starting with number three.
Stock #3: Kamada Ltd. (KMDA)
Based in Rehovot, Israel, KMDA provides plasma-derived protein therapeutics. It operates in two segments: Proprietary Products and Distribution. The company offers WINRHO SDF, HEPAGAM B, VARIZIG, GLASSIA, KamRho (D) IM, KamRho (D) IV, BRAMITOB, FOSTER, PROVOCHOLINE, AEROBIKA, RUPAFIN, IVIG, VARITECT, ZUTECTRA, HEPATECT CP, MEGALOTECT CP etc.
KMDA’s trailing-12-month EBITDA margin of 15.05% is 197.6% higher than the industry average of 5.06%. Its 7.46% trailing-12-month EBIT margin is significantly higher than the 0.39% industry average.
For the fiscal third quarter that ended September 30, 2023, KMDA’s total revenues increased 17.7% year-over-year to $37.93 million. Its gross profit increased 15% over the prior year quarter to $14.80 million. In addition, adjusted EBITDA grew 31.4% year-over-year to $7.86 million.
Also, its net income increased 565.9% over the prior year quarter to $3.22 million. In addition, its EPS came in at $0.06, registering an increment of 500% year-over-year.
Analysts expect KMDA’s revenue to increase 15.5% year-over-year to $167.93 million for the quarter ending December 2023. Its EPS is expected to grow 133.3% year-over-year to $0.28 for the same period. Its EPS surpassed in three of four trailing quarters. KMDA’s shares have gained 24.4% over past year to close the last trading session at $5.61.
KMDA’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
KMDA has an A grade for Sentiment and a B for Value. Within the Medical - Pharmaceuticals industry, it is ranked #34 out of 162 stocks. To see additional POWR Ratings for Stability, Growth, Momentum and Quality for KMDA, click here.
Stock #2: Voyager Therapeutics, Inc. (VYGR)
VYGR, a gene therapy company, focuses on developing treatments and next-generation platform technologies. The company’s lead clinical candidate is the VY-AADC, which is in an open-label Phase 1 clinical trial for treating Parkinson’s disease.
VYGR’s trailing-12-month EBIT margin of 27.39x is significantly higher than the 0.39x industry average. Its 20.50% trailing-12-month levered FCF margin is significantly higher than the 0.09% industry average.
During the nine month that ended September 30, 2023, VYGR’s collaboration revenue increased 276.7% year-over-year to $159.95 million. The company’s net income and net income per share amounted to $75.94 million and $1.78, compared to a loss of $22.78 million and $0.59 in the year-ago period.
Street expects VYGR’s revenue come in at $45.31 million for the year ending December 2024. The stock has gained 13.6% over the past three months to close the last trading session at $7.43.
It’s no surprise that VYGR has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Value and a B for Quality. It is ranked #32 in the same industry.
Beyond what is stated above, we’ve also rated VYGR for Growth, Stability, Sentiment and Momentum. Get all VYGR ratings here.
Stock #1: OptiNose, Inc. (OPTN)
OPTN a specialty pharmaceutical company, focuses on the development and commercialization of products for patients treated by ear, nose, throat, and allergy specialists in the United States.
OPTN’s trailing-12-month gross profit margin of 86.83% is 52.1% higher than the 57.08% industry average. Its trailing-12-month asset turnover ratio of 0.70x is 77.9% higher than the 0.39x industry average.
For the third quarter ended September 30, 2023, OPTN’s total revenues increased came in at $19.82 million. As of September 30, 2023, its total current liabilities stood at $163.98 million, compared to $178.73 million as of December 31, 2022. Also, its total liabilities stood at $179.02 million, compared to $200.85 million for the same period.
The consensus revenue estimate of $95.71 million for the year ending December 2024 reflects a 36.1% rise year-over-year. Its EPS is expected to grow 20.6% for the same period. The stock has gained 15.4% over the past six months to close the last trading session at $1.35.
OPTN has an overall B rating, equating to a Buy in our POWR Ratings system.
OPTN’s is ranked #31 in the same industry. It has an A grade for Sentiment and a B for Growth. To see additional OPTN’s ratings for Value, Stability, Momentum and Quality, click here.
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VYGR shares were trading at $7.41 per share on Wednesday afternoon, down $0.02 (-0.27%). Year-to-date, VYGR has declined -12.20%, versus a 2.46% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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