By Scott Rubin
A screen of biotechnology stocks focusing on strong revenue growth and reasonable valuations turned up some interesting, and widely followed, names. The metrics the screen used were Nasdaq and NYSE companies in the drugs and biotechnology sector that had a market capitalization over $1 billion, revenue growth between 15-25% year over year, a P/E ratio less than 20 and a PEG ratio less than 2.
Four stocks met the required criteria. They were Cubist Pharmaceuticals (CBST), Cephalon (NASDAQ:CEPH), Gilead Sciences (NASDAQ:GILD), and Teva Pharmaceuticals (NASDAQ:TEVA). All of these names should be familiar to biotech investors. Below is a summary of each.
Cubist Pharmaceuticals is the smallest of these companies with a market cap of $1.3 billion. The stock trades at $22.60. CBST has grown its revenue 21.80% year over year. The shares trade at a trailing P/E of around 13.77 and a PEG ratio of 0.8244. The median Wall Street price target is $25.50 with a high target of $29.00.
Cephalon has a market cap of $31.8 billion. The stock trades at $64.12. The company has grown its revenue 16.22% in the last year. CEPH currently has a trailing P/E ratio of 12.76 and a PEG ratio of 1.25. The median Wall Street price target on the stock is $74.00 with a high target of $92.00.
Gilead Sciences has a market cap of $31.8 billion. GILD shares trade at $38.92. The company has grown its revenue 24.60% over the last year. The stock trades at a trailing P/E of 11.26, and a PEG ratio of just 0.79. Wall Street has a median price target of $42.00 and a high target of $61.00.
Teva Pharmaceuticals has a market cap of $49.4 billion. The stock trades at $52.80. TEVA has grown its revenue by 21% in the last year. The shares trade at a trailing P/E of 19.15 and a PEG ratio of 1.27. The median Wall Street price target for TEVA is $67.50 with a high target of $78.00.
Author's Disclosure: No position