Every month, analysts have their favourite stocks in the respective sectors, which they believe will have a great year ahead. Similarly, for the month of February, the biotechnology industry was chosen as one of the most consistent performers in the stock market. Two stocks from this industry were chosen as the best and as the ones with great growth potential based on a number of factors, the most important of them being the success of their drugs in treating certain chronic ailments. Let us look at some of these high-potential biotech stocks for 2015:
Great drugs and confident forecasts
One of the most important reasons of Celgene Corporation (CELG, Financial) finding a place among the top biotechnology stocks for 2015 is its commitment to investors and shareholders. Recently, the company declared its guidance or forecast report for the next 20 years – which is a clear symbol of the long term relationship that it wishes to enjoy with its investors. It is indeed rare to see such a long commitment from any company and Celgene needs to be respected just for this.
The second most compelling reason for Celgene to have a great 2015 is the success enjoyed by four of the drugs that it markets – Revlimid, to treat second level of multiple myeloma ($5 billion per year), Pomalyst, to treat third level of multiple myeloma ($680 million per year), Abraxane, to treat cancer ($848 million per year) and newly launched drug, Otezla to treat psoriasis. All these drugs posted impressive figures last year which enabled Celgene post overall revenue of $7.5 billion in 2014. Celgene expects that revenues will touch somewhere between $9 and 9.5 billion this year. These interesting forecasts and Celgene’s commitment to live up to the forecasts, makes it one of the outstanding performers in this sector. Share price movement of Celgene can be seen below:
High quality of multiple sclerosis drugs
Biogen Idec (BIIB, Financial) is the market leader in the biotechnology sector, when it comes to multiple sclerosis drugs. Currently there are 3 Biogen drugs in the market to treat this condition. They are Avonex, Tysabri and Tecfidera. Out of these, the first two have been in the market for quite some time and have contributed immensely to Biogen’s revenues. The last one, Tecfidera, an oral drug, was launched recently after the FDA approved of the same in 2013. During 2014 alone, sales from this drug were pegged at a whopping $3.6 billion.
The year 2014 saw Biogen launch newer drugs to diversify its portfolio. Two drugs to treat the condition of haemophilia were launched during 2014. Sales from these 2 drugs were close to $47 million during the 3rd quarter; however they increased to a sizeable number of $77 million during the 4th quarter. These new drugs, along with the super successful multiple sclerosis drugs, enabled Biogen to post an impressive 40% increase in revenues in 2014 from 2013, to the tune of $9.7 billion. For the last 5 years, the multiple sclerosis drugs alone have contributed to an increase of 17.26% and 29.9% in the compounded annual revenues and compounded earnings per share respectively of Biogen. Sales is expected to grow between the range of 14% and 15% for 2015, with the help of which, Biogen expects to record a phenomenal growth in the adjusted EPS in the range of $16.60 - 17 per share this year. Share price movement of Biogen for the last few months is shown below:
Conclusion
Both these biotechnology stocks not only possess highly successful drugs to define their market power but also have immense cash-generating capacities to be paid out to investors. If you are an investor who is looking for high rewards in the next couple of years, these biotechnology stocks would be the best bet for you. These companies are high on innovation and are the market leaders in their respective products. Hence, investors of these stocks will have lots to cheer about in the coming months.
