Biopharma's Hot Stocks for this Week! - Earnings ESP

By
A A A
Share |

The biopharmaceutical industry represents huge commercial potential and is expected to grow at a rapid pace. The U.S. is a major producer of biopharmaceuticals and houses many leading biopharma companies. Biopharmaceuticals are essentially drugs based on biotechnology which include interferons and vaccines.

Growth in the sector is expected to be driven by an aging population (major consumers of biopharmaceuticals), launch of new biopharma drugs, and label expansion of existing drugs. However, the development of biopharmaceuticals involves significant investment and the risk of pipeline failure is always present.

Having said that, biopharma companies have been attracting a lot of attention with big pharma players looking towards biopharmaceuticals to bolster their pipelines which are under pressure. Merger and acquisition (M&A) and licensing activities in this segment have increased significantly with pharma companies targeting biopharma stocks that have attractive pipeline candidates or technology that can be used for the development of novel therapeutics.

In view of this backdrop, it might be a good idea to bet on a handful of biopharma stocks that are likely to beat estimates this quarter. Strong results along with positive pipeline updates will add to investors' confidence in these stocks, leading to rapid price appreciation.

How to Make a Choice?

Given the presence of multiple players in the biopharma space, pinpointing stocks that have the potential to beat estimates may appear to be a daunting task. One way to narrow down the list of choices during this earnings season is by looking at stocks that have the combination of a favorable Zacks Rank - Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) - and a positive Zacks Earnings ESP .

Earnings ESP is our proprietary methodology for identifying stocks that have high chances of surprising with their next earnings announcement. It shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate.

Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.

With the current earnings season on its last leg, we have chosen three biopharma stocks possessing the right combination of elements to post strong results this quarter:

Medivation, Inc. ( MDVN ) is a Zacks Rank #3 stock with an earnings ESP of +10.71%. For the third quarter, the Zacks Consensus Estimate hints at a loss of 28 cents.

Medivation, a San Francisco, Calif. based Biopharmaceutical Company, focuses on developing drugs for treating serious diseases with unmet medical need. Medivation's sole marketed product is Xtandi for treating post chemotherapy metastatic castration-resistant prostate cancer patients.

The company is scheduled to announce its third quarter 2013 results on Nov 12, after market close.

Regulus Therapeutics Inc. ( RGLS ) is a Zacks Rank #3 stock with an earnings ESP of +12.50%.

Regulus, a San Diego, Calif. based Biopharmaceutical Company, focuses on discovering and developing innovative drugs targeting micro ribonucleic acids. The company, with an interesting pipeline, boasts of associations with major players.

The company is scheduled to announce its third quarter 2013 results on Nov 13, after market close.

Kythera Biopharmaceuticals, Inc. ( KYTH ) is a Zacks Rank #3 stock with an earnings ESP of +9.46%.

Kythera, a Calabasas, Calif. based biopharmaceutical company, focuses on the discovery, development and commercialization of novel prescription drugs targeting the aesthetic medicine market. The company currently does not have any marketed product. Its lead pipeline candidate is ATX-101(phase III). It is being developed for the reduction of submental fat.

The company is scheduled to announce its third quarter 2013 results on Nov 14.

The Way Forward

We believe that the biopharmaceutical industry will continue to grow due to the factors highlighted above. Successful development and subsequent commercialization of the impressive late-stage pipeline of most biopharma players, targeting lucrative areas like hepatitis C virus and oncology among others, is expected to aid growth further in the biopharma space. The focus on emerging markets is also encouraging.

We believe that the above mentioned biopharma stocks with impressive growth prospects and fundamentals currently represent good investment options. With the biopharma industry representing solid growth potential, a sneak peek into the biopharma space for some possible outperformers backed by a favorable Zacks Rank and a positive Zacks Earnings ESP could be handy for investors.


KYTHERA BIOPHRM (KYTH): Free Stock Analysis Report

MEDIVATION INC (MDVN): Free Stock Analysis Report

REGULUS THERAP (RGLS): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Earnings

Referenced Stocks: KYTH , MDVN , RGLS

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Form 990 Explained
Form 990 Explained                  
Wacky College Scholarships
Wacky College Scholarships          

Stocks

Referenced

100%
100%
100%

Most Active by Volume

102,270,513
  • $61.54 ▲ 0.29%
61,526,276
  • $3.21 ▲ 1.26%
49,388,966
  • $4.25 ▼ 3.85%
41,293,190
  • $16.415 ▲ 0.27%
36,636,795
  • $87.50 ▲ 0.85%
27,906,357
  • $46.15 ▼ 2.70%
27,211,299
  • $26.395 ▲ 0.55%
25,527,511
  • $34 ▼ 1.13%
As of 4/24/2014, 01:43 PM