Due to its resilience and potential for steady performance irrespective of economic conditions, the pharmaceutical sector could be an appealing investment option now. I think quality pharma stocks, Kiniksa Pharmaceuticals, Ltd. (KNSA), Collegium Pharmaceutical, Inc. (COLL), and Wave Life Sciences Ltd. (WVE), could be ideal stocks to add to your portfolio.
The pharmaceutical industry is poised for substantial growth in the coming years, fueled by the rising incidence of chronic diseases. This growth is further driven by the widespread adoption of new technologies and the relentless research and development efforts in the field.
With a projected revenue of $1.16 trillion this year, the global pharmaceutical industry is on track to achieve remarkable heights. Moreover, the industry is expected to experience a steady CAGR of 5.4% from 2023-2027, resulting in a market volume of $1.44 trillion by 2027.
In addition, in terms of global comparison, the US is anticipated to generate the highest revenue, reaching $624.10 billion this year.
Furthermore, the global nano biotechnology market has seen significant growth in recent years due to several factors, such as increasing demand, technological advancements, and favorable government initiatives.
Also, the global nanomedicine market is expected to witness substantial growth driven by the expanding applications of nanotechnology due to technological advancements. According to Brainy Insights, the nanomedicine market is valued at $160 billion in 2023 and is projected to reach $396.15 billion by 2031.
Let us discuss the above-mentioned stocks:
Kiniksa Pharmaceuticals, Ltd. (KNSA)
Based in Hamilton, Bermuda. KNSA is a biopharmaceutical company that focuses on discovering, acquiring, developing, and commercializing therapeutic medicines for patients suffering from debilitating diseases with significant unmet medical needs worldwide.
KNSA’s trailing-12-month EBITDA margin of 10.26% is 238.1% higher than the industry average of 3.03%. Its trailing-12-month asset turnover ratio of 0.70x is 99.5% higher than the 0.35x industry average.
KNSA’s net sales increased 50.2% year-over-year to $48.35 million in the first quarter that ended March 31, 2023. Its loss from operation reduced by 52% from the year-ago quarter to $11.20 million. The company’s net loss and net loss per share declined by 47.4% and 50% year-over-year to $12.27 million and $0.18, respectively.
Street expects KNSA’s revenue for the second quarter (ending June 2023) to increase 93.5% year-over-year to $52.20 million. Its EPS is expected to rise 55.2% in the same quarter. Additionally, the company surpassed the revenue and EPS estimates in three of its trailing four quarters, which is impressive.
Over the past year, the stock has gained 87.2% to close the last trading session at $15.65. It has soared 14.7% over the past month.
KNSA’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.
It has an A grade for Value and a B for Sentiment. In the 169-stock Medical - Pharmaceuticals industry, the stock is ranked #43.
In addition to the POWR Ratings we’ve stated above, we also have KNSA’s ratings for Growth, Stability, Momentum, and Quality. Get all KNSA ratings here.
Collegium Pharmaceutical, Inc. (COLL)
COLL is a specialty pharmaceutical company that develops and commercializes medicines for pain management.
COLL’s trailing-12-month EBITDA margin of 39.54% is significantly higher than the industry average of 3.03%. Its trailing-12-month asset turnover ratio of 0.43x is 21.4% higher than the 0.35x industry average.
COLL’s net product revenue increased 72.9% year-over-year to $144.77 million in the first quarter (ended March 31, 2023). Its gross profit came in at $48.50 million. Moreover, the company reported an income from operations of $24.63 million, compared to a loss from operations of $10.02 million in the year-ago quarter.
The consensus EPS estimate of $1.23 for the fiscal second quarter (ending June 2023) represents a 1.3% improvement year-over-year. The consensus revenue estimate of $138.29 million for the current quarter represents an 11.9% increase from the same quarter last year. Moreover, the company has surpassed the revenue estimates in each of its trailing four quarters.
COLL’s shares have gained 37% over the past year to close the last trading session at $22.18.
COLL’s POWR Ratings reflect this robust outlook. The stock has an overall B rating, translating to Buy in our proprietary rating system.
It has an A grade for Growth and B in Value and Quality. It is ranked #40 in the same industry.
To access additional ratings of COLL for Stability, Momentum, and Sentiment, click here.
Wave Life Sciences Ltd. (WVE)Headquartered in Singapore, WVE is a clinical-stage genetic medicine company that designs, optimizes, and produces novel stereopure oligonucleotides through PRISM, a discovery, and drug-developing platform.
WVE’s trailing-12-month CAPEX/Sales of 11.07% is 137% higher than the industry average of 4.67%. Its trailing-12-month cash per share of $2.12 is 68.7% higher than the $1.25 industry average.
During the fiscal first quarter, which ended on March 31, 2023, WVE’s revenue increased 638.8% year-over-year to $12.93 million. Its loss from operations reduced by 20.5% from the year-ago quarter to $30.29 million. Additionally, the company’s net loss and net loss per share declined 27.5% and 56.5% year-over-year to $27.41 million and $0.27, respectively.
Analysts expect WVE’s revenue in the fiscal quarter ending June 2023 to increase significantly year-over-year to $6.36 million.
The stock has gained 94.4% over the past year to close the last trading session at $4.18.
WVE’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to Buy in our proprietary rating system.
It has a B grade for Growth and Quality. Within the same industry, it is ranked #42.
Click here for WVE’s Value, Sentiment, Momentum, and Stability ratings.
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KNSA shares were trading at $15.78 per share on Tuesday morning, up $0.13 (+0.83%). Year-to-date, KNSA has gained 5.34%, versus a 14.37% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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