Biotech stocks, characterized by their inherent volatility and potential for substantial returns, present a compelling investment opportunity for discerning investors. Thorough due diligence is crucial since the outcome of clinical trials and their subsequent market penetration can significantly impact stock prices.
To assist investors in identifying promising biotech stocks, we have compiled a list of five companies exhibiting robust revenue growth and forward-looking solid prospects. Let’s first understand the biotech stocks.
What are Biotech Stocks?
The biotechnology sector has emerged as a cornerstone of modern healthcare at the intersection of biology and technology. Biotech companies are dedicated to discovering, developing, and commercializing innovative biological products, ranging from pharmaceuticals and vaccines to medical devices.
While often used interchangeably with the term “pharma,” biotech products are distinct in their reliance on living organisms and biological processes.
Why Invest in Biotech Stocks?
The sector is rapidly emerging as a strategic choice for discerning investors. The global biotechnology industry, estimated at USD 1.55 trillion in 2023, is poised for significant growth and is expected to expand at a CAGR of 13.96% from 2024 to 2030.
Both institutional investors and high-net-worth people are interested in biotech due to its potential to address major global health issues and support sustainable development.
The Financial Times reported that many single-family offices and members of prestigious investment networks have allocated capital to biotech and healthcare initiatives.
This growing popularity reflects a recognition of the sector’s ability to generate financial returns and positive societal outcomes.
Top Performing Biotech Stocks to Consider
When selecting biotech stocks for long-term investment, focusing on companies with solid financials, robust pipelines, and a track record of successful product launches is essential.
Here are five top-performing biotech stocks that have shown promise and are worth considering for your investment portfolio.
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Halozyme Therapeutics (HALO)
Halozyme Therapeutics is a biotechnology company specializing in drug delivery solutions. The company’s proprietary Enhanze technology enables the subcutaneous administration of therapeutic agents, offering a more convenient and patient-friendly alternative to intravenous injections.
It has solidified its position as a critical player in the pharmaceutical industry.
Halozyme’s recent financial performance has been impressive. The company outperformed the market with second-quarter revenue of $231.4 million.
Halozyme (HALO) surged over 4% on August 7th, following the release of its second-quarter earnings.
This expansion is due to the company’s excellent performance and the rising need for cutting-edge medication delivery methods.
With a favorable market outlook and a proven track record, the company is well-positioned to capitalize on emerging opportunities in the drug delivery sector.
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Harmony Biosciences (HRMY)
Harmony Biosciences, a biotechnology company, is advancing its lead product, pitolisant. Currently marketed as Wakix for narcolepsy, the company is investigating its potential for additional sleep disorders, including idiopathic hypersomnia and Prader-Willi syndrome.
Wakix sales increased 29% year over year to $172.8 million in the second quarter, aligning with market expectations.
Harmony’s stock recently exhibited a positive breakout, though it is consolidating near its entry point.
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United Therapeutics (UTHR)
United Therapeutics Corporation is a biotechnology company dedicated to developing and commercializing innovative therapies for life-threatening pulmonary diseases. The company’s top line grew by 20% year-over-year in Q2 2024, reaching $714.9 million, in contrast to $596.5 million in the 2nd quarter of 2023.
Tyvaso, the company’s primary offering, is a targeted drug that treats pulmonary arterial hypertension (PAH), a rare and sometimes lethal illness.
In the second quarter of 2024, Tyvaso sales demonstrated robust growth, increasing by 25% to $398.2 million. This growth was driven by ongoing market penetration and strong patient demand.
United Therapeutics is actively advancing its pipeline of promising drug candidates, focusing on expanding its PAH franchise. In 2026, the company expects to get the results of a crucial PAH research, which might result in the approval of a new course of treatment for patients.
Despite a recent decline in its stock price after the company’s second-quarter earnings announcement, United Therapeutics is well-positioned for future growth and success owing to its strong financial standing and pipeline of exciting new drugs.
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Ligand Pharmaceuticals (LGND)
Ligand Pharmaceuticals continues solidifying its position as a leading player in the biotechnology industry. The company’s dedication to innovation and growth is evident in its robust portfolio of over 100 partnered programs spanning commercial and developmental stages.
Recent strategic moves have further enhanced Ligand’s market standing. The FDA approval of Capvaxie, a pneumococcal vaccine developed in partnership with Merck, and the acquisition of Apeiron Biologics, including royalty rights to the cancer treatment Qarziba, demonstrate the company’s ability to identify and capitalize on promising opportunities.
Ligand’s partnership with Verona Pharma also yielded significant results, culminating in the FDA approval of Ohtuvayre, an inhaled chronic obstructive pulmonary disease treatment. This milestone will generate a low single-digit royalty for Ligand on worldwide net product sales.
Financially, Ligand continues to deliver strong performance. In the second quarter, the company exceeded market expectations with adjusted earnings per share of $1.40 and revenue of $41.5 million, which was $26.4 million in the same term last year. While earnings experienced a slight decline year-over-year, sales growth of 57.5% highlights the company’s ability to drive revenue growth.
These data underscore the company’s consistent outperformance and position it as a compelling investment opportunity in the biotech sector.
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ADMA Biologics (ADMA)
Biotech stock ADMA Biologics continues to exhibit robust growth. The company specializes in human immune globulin products for treating immunodeficiencies.
The company’s impressive financial performance drove this surge, as adjusted earnings of 14 cents per share significantly outperformed expectations of 8 cents. Moreover, sales surged by over 78% YoY increase to $107.2 million, and gross profits surged to $57.5 million in Q2 2024 from $16.7 million a year ago.
The positive financial results have solidified ADMA stock’s position above critical technical indicators, surpassing the 50-day and 200-day moving averages. ADMA is currently trading at a record high, demonstrating its strong momentum.
Adma stock’s upward trajectory is reinforced by its inclusion in the IBD Tech Leaders and IBD 50 lists, identifying companies exhibiting robust growth potential and favorable technical characteristics.
Final Thoughts
Given biotech stocks’ impressive performance, they present attractive opportunities for options traders. However, it’s crucial to approach options trading cautiously, especially when dealing with their inherent volatility.
It’s essential to have a solid understanding of the risks involved and to develop a well-informed trading strategy.
Investors wanting to diversify their portfolios should check at other high-potential best-performing AI ETFs that are now leading the innovation and growth markets. This allows you to better position yourself for long-term success in a constantly changing market context.
