This Weeks Free Stock Pick - Investing in Biotech Earnings Growth
The biotechnology sector' s run over the last few years has been nothing short of astounding. The sector has easily beaten broad market indexes and it has been a leader in the health care space as well thanks to a variety of blockbuster drugs, shifting demographics, and a boost to insurance rolls as of late.
The space remains well-positioned for growth and the medical biomed/genome industry is actually currently ranked in the top 20% overall. In fact, we have over 50 companies in the space that have ranks of 'buy' so there are plenty of great companies to choose from in the biotech world.
Today though, let's take a closer look at a company that is pretty much synonymous with the space and could continue to lead the market higher. That stock is of course Biogen (NASDAQ:BIIB) a biotech company which may be the perfect mix between growth and stability for investors seeking a top choice in the ever-popular biotechnology sector.
Biogen in Focus
Biogen is a Massachusetts-based developer of drugs to treat neurological, autoimmune and hematologic disorders. However, the company has several therapies that help people with Multiple Sclerosis while drugs here (including AVONEX, TECFIDERA, and TYSABRI) account for the bulk of BIIB's revenue.
Beyond the company's solid lineup of drugs right now, investors should note that BIIB also has a great drug pipeline as well. This should help Biogen to prosper in the years to come, assuming of course they can gain FDA approval for at least a few of their in-development drugs. This is very well possible though as BIIB currently has about 20 drugs in trial right now, while it has five in the critical phase 3 of the program.
Analysts tracking BIIB stock are also pretty optimistic in general about the company's near term prospects, as evidenced by some recent earnings estimate revisions for the stock. Current quarter EPS estimates have risen by about seven cents in the past three months up to $3.90/share, while we have seen a move from $16.67/share to $16.89/share for the current year time frame over the past 90 days as well.
These revisions help to push BIIB's growth rates up to very strong levels, and especially so for a big cap company. In fact, earnings are expected to grow 59% for this quarter when compared to the year ago time frame, while the current year numbers are expected to grow a robust 22% when compared to the previous year. Not bad at all for a $100 billion market cap company!
But if that wasn't enough for investors, you should also consider how BIIB does in earnings season, especially since a report for the company is coming up very soon. BIIB has actually beaten estimates in three straight quarters, while its four quarter average shows an earnings beat of over 11%.
Thanks to these factors, it shouldn't be too surprising to note that we have assigned Biogen a Zacks Rank #1 (Strong Buy) and are looking for the outperformance to continue. We particularly think it makes sense for growth oriented investors as well, since the stock has a 'B' grade for its Growth Style Score too.
The biotechnology segment remains a very strong segment of the market continuing its run of outperformance. And while there are a ton of great choices in this market, Biogen should stand out for most.
Not only does the company have great growth prospects thanks to a flurry of drugs in its pipeline, but analysts are on board with the company's trajectory as well. Earnings estimates have been rising and with an earnings release coming up pretty soon, now could be the time to get in on this top ranked large cap stock.
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