The Cream Of The Crop: 5 Biotechs That Outrank Most Stocks
In mid-October, biotech stocks marked a significant recovery as they regained their 50-day moving average, propelled by encouraging results from Wave Life Sciences (WVE) in RNA editing. While the resurgence offers a glimmer of hope, it still falls short of the buoyant levels experienced during 2020 when biotech firms were thrust into the spotlight due to their roles in developing COVID-19 solutions. As society adjusts to living with the pandemic, other pressing concerns such as economic instability and political uncertainties have sidetracked interest in biotech stocks.
Notably, the biotech industry group boasts a Relative Strength Rating of 83, positioning it within the top 17% of all industry groups based on 12-month performance metrics. This article highlights five biotech stocks that stand out in the current market landscape, driven by both technical and fundamental strengths:
1. Corcept Therapeutics (CORT)
Leading the charge within biotech is Corcept Therapeutics, recognized for its diverse pipeline aimed at treating various conditions such as Cushing syndrome, cancer, neurological diseases, and psychiatry. It has gained significant attention for its flagship product, Korlym, designed for Cushing syndrome patients suffering from type 2 diabetes. In the second quarter, Corcept reported adjusted earnings of 32 cents per share, achieving $163.8 million in sales. These figures represented a 14% increase in earnings, surpassing expectations by 9 cents per share, while sales grew over 39%, exceeding Wall Street forecasts.
Corcept’s stock has recently broken out of a cup base with a buy point at 39.75 on September 17. With a strong Composite Rating of 96 and a Relative Strength Rating of 97, it is classified as a Tech Leader. Investors are advised to consider taking profits when shares rise 20% to 25% above the entry point.
2. United Therapeutics (UTHR)
Another top contender is United Therapeutics, which specializes in chronic disease medications. Its primary product, Tyvaso, is a treatment for pulmonary arterial hypertension (PAH) that saw a sales increase of 25% to reach $398.2 million in the June quarter. However, this figure did not meet expectations of $403.3 million, leading analysts to scrutinize the company’s pipeline more closely. United Therapeutics now anticipates the results of a final-phase PAH study in 2026, delayed from previous projections for 2025.
The stock hit a record high intraday on September 3 but has since experienced a setback. With a remarkable Composite Rating of 98, it maintains a slightly lower Relative Strength Rating of 93. Shares have recently broken out of a flat base, with a new buy point set at 366.08.
3. Halozyme Therapeutics (HALO)
Halozyme Therapeutics shines as a leader in drug delivery systems. Its proprietary Enhanze technology facilitates subcutaneous drug administration, positively impacting numerous large-market medications, including Johnson & Johnson’s Darzalex Faspro and Roche’s Herceptin. Recently, Halozyme secured approval for a subcutaneous version of Roche’s multiple sclerosis medication, now marketed as Ocrevus Zunovo.
In the second quarter, Halozyme’s performance included adjusted earnings of 91 cents per share, with sales of $231.4 million, both surpassing analyst expectations. The biotech company maintains robust full-year guidance with projected adjusted earnings ranging from $3.65 to $4.05 per share. Despite lingering below its 50-day moving average as of October 18, Halozyme has strong ratings of 96 for Composite and 84 for Relative Strength, and it is also listed as a Tech Leader.
4. Harmony Biosciences (HRMY)
Focusing on a singularly innovative product, Harmony Biosciences has gained traction with its narcolepsy treatment, Wakix (pitolisant). The company perceives its drug portfolio as a “portfolio in a product opportunity,” exploring pitolisant’s efficacy against various conditions such as idiopathic hypersomnia and Prader-Willi syndrome.
In the second quarter, sales of Wakix reached $172.8 million, a 29% year-over-year increase, aligning closely with analyst expectations. While Harmony’s shares are currently trading below their 50-day line and struggling to reach a buy point of 35.40 from a consolidation, it boasts a Composite Rating of 98 and an RS Rating of 81, positioning it among the Tech Leaders.
5. ADMA Biologics (ADMA)
Last but not least, ADMA Biologics faced challenges after its independent auditor unexpectedly resigned on October 10, resulting in a 16% dip in stock value. Despite maintaining forward guidance for 2024 and 2025, ADMA, known for its human immune globulin products aimed at treating immunodeficiencies, has seen a decline in valuation.
Prior to this setback, ADMA’s stock had surged 31% on August 9 following an adjusted earnings report of 14 cents per share, substantially exceeding the expected 8 cents. Sales soared 78% to $107.2 million, surpassing projections. While currently trading below its 50-day moving average, ADMA remains above its 200-day moving average and boasts the highest possible Relative Strength and Composite ratings of 99.
Investors should keep a close eye on these five biotech stocks as they navigate the current market landscape, particularly given their resilience in performance metrics even amidst broader market uncertainties.