The biotech sector holds great promise and is expected to grow
at a rapid pace driven by an aging population (major consumers of
biotech drugs), launch of new drugs and label expansion of
The industry seems to be living up to its promise and is one of
the hottest industries around judging by the strong performance
of the NYSE ARCA Biotech Index (^BTK). The index has gained more
than 65% in the last 12 months and approximately 20.2% since the
start of the year.
The U.S. is a major producer of biotech drugs. We note that
bringing biotech drugs to the market is not a risk-free
exercise and involves substantial investment.
Despite the risk involved in the development of biotech drugs,
many leading pharma companies across the globe are looking
towards biotech companies as they aim to bolster their sagging
pipelines and sustain growth. This has given rise to significant
merger and acquisition (M&A) and licensing activities. For
) recently expanded its agreement with
Alnylam Pharmaceuticals, Inc.
) for the development of rare genetic diseases. Genzyme, Sanofi's
subsidiary, has acquired a 12% stake in Alnylam through a $700
Moreover, many small biotech companies have gone public of late
-- another indication of the good health of the biotech sector.
3 Hot Biotech Stocks
With the earnings season almost over, it might be a good idea to
look at a few biotech stocks which have performed well in the
final quarter of 2013 and are expected to continue their strong
performance in the coming quarters.
Alexion Pharmaceuticals, Inc.
): Headquartered in Cheshire, CT, this Zacks Rank #1 (Strong Buy)
company holds immense potential that can enrich your portfolio.
The company exited 2013 on a strong note with both earnings and
revenues surpassing expectations. The company's 2014 guidance too
is encouraging. The company has been delivering positive earnings
surprises since the final quarter of 2010. Earnings estimates for
this company have been on the upswing, having gone up by 39 cents
and 75 cents for 2014 and 2015 respectively over the last 30
Strong sales of the company's sole marketed product, Soliris,
have contributed to the massive 103% price appreciation at
Alexion over the last 12 months. Moreover, the company will be
benefiting from lower tax rates. The company, with a long-term
growth projection of about 29.1%, will be a nice addition to your
portfolio. We recommend that you make this high flying
biotech stock a part of your portfolio.
Gilead Sciences, Inc.
), headquartered in Foster City, CA, performed very well in the
final quarter of 2013 beating the Zacks Consensus Estimate both
in terms of revenues as well as earnings. The most promising
development at this Zacks Rank #1 company has been the U.S.
approval of potential blockbuster hepatitis C virus (HCV)
therapy, Sovaldi, in Dec 2013. Sovaldi made a strong debut and
recorded U.S. sales of $136.4 million in the fourth quarter of
The strong launch indicates continued outperformance in 2014.
Sovaldi, with its high cure rates, a short treatment period and
reduction/elimination of the need for interferon injections, has
the potential to change the treatment paradigm in the HCV space.
This company, with a long-term growth projection of approximately
34%, has seen the Zacks Consensus Estimate go up by 74 cents and
$1.35 for 2014 and 2015, respectively over the last 30 days. The
company, which looks well-positioned for growth driven by its
strong product portfolio led by Sovaldi, has seen its price jump
93.7% over the last 12 months.
): This Thousand Oaks, CA-based biotechnology company is our
third pick. Amgen, a Zacks Rank #2 (Buy) company, posted strong
fourth quarter results with a positive earnings surprise of
Fourth quarter total product revenues increased 11% from the
year-ago quarter to $4,799 million with drugs like Neulasta,
Epogen, Enbrel, Prolia and Xgeva driving growth. The company,
with a long-term growth projection of about 7.8%, has seen the
Zacks Consensus Estimate go up by 18 cents and 13 cents for 2014
and 2015, respectively over the last 2 months.
The share price of the world's largest biotechnology company
has appreciated 37.9% over the last 12 months driven by strong
product sales, positive pipeline developments and prudent
ALNYLAM PHARMA (ALNY): Free Stock Analysis
ALEXION PHARMA (ALXN): Free Stock Analysis
AMGEN INC (AMGN): Free Stock Analysis Report
GILEAD SCIENCES (GILD): Free Stock Analysis
SANOFI-AVENTIS (SNY): Free Stock Analysis
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We believe that the above-mentioned stocks, with their strong
fundamentals and healthy growth prospects, will prove to be
market winners representing good investment options. With the
biotech industry representing solid growth potential, a sneak
peek into the biotech space for some possible outperformers
backed by a favorable Zacks Rank and positive earnings estimate
revisions could be handy for investors.