If there’s a silver lining regarding the coronavirus pandemic, it’s that it demonstrated the importance of the top biotech stock picks for 2023. While medical innovations may seem frustratingly slow, the Covid-19 crisis proved that when humanity comes together, it can foster incredible advancements at breakneck speed. Moving forward, this segment will carry this momentum toward other breakthroughs.
Nevertheless, even the top biotech stock picks for 2023 can’t avoid economic realities. With macro headwinds implying that global recession storms may be on the horizon, investors must be smart. Therefore, for this list of biotechnology innovators, I focused exclusively on enterprises that featured strong financial stability. It might not be the prettiest list in terms of upside potential. Given the circumstances, though, you want to think about safety first. With that, below are the top biotech stock picks for 2023.
Regeneron Pharmaceuticals (REGN)
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Headquartered in Westchester County, New York, Regeneron Pharmaceuticals (NASDAQ:REGN) originally focused on neurotrophic factors and their regenerative capabilities, giving rise to its name, according to its public profile on Google Finance. From there, the company branched out into the study of both cytokine and tyrosine kinase receptors.
At the time of writing, Regeneron commands a market capitalization of $83.4 billion. On a year-to-date basis, REGN gained 22% of its equity value. Further, in the trailing half-year period, shares stormed higher to the tune of 33%. Much of this enthusiasm centers on the fundamentals. For instance, in September, Regeneron posted positive late-stage clinical results for its key eye medication Eylea.
On the financial front, the company will likely draw attention because of its profitability metrics. For instance, its net margin stands at 39.2%, beating out over 94% of the competition. As well, the market prices REGN at only 18.2 times forward earnings. In contrast, the sector median value is 28 times, representing solid value. Therefore, REGN is one of the top biotech stock picks for 2023.
United Therapeutics (UTHR)
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A somewhat overlooked name among top biotech stocks for 2023, United Therapeutics (NASDAQ:UTHR) will almost certainly attract new investors in the coming months. On paper, United develops novel, life-extending technologies for patients in the areas of lung disease and organ manufacturing. Currently, the company carries a market cap of $12.8 billion.
Since the start of the year, UTHR delivered a blistering return of nearly 33%. For context, the underlying Nasdaq Composite index dropped 30% during the same period. Further, most of this upswing came recently. In the trailing half-year period, UTHR popped up almost 27%. Again, the main catalysts focus on fundamental performance. Recently, United posted third-quarter results that exceeded analysts’ expectations.
To be 100% transparent, Gurufoucs.com warns that UTHR is significantly overvalued. However, the market prices shares at 14.5 times forward earnings. Again, that’s considerably lower than the sector median of 28 times. Also, United features a return on equity of 17%, ranking higher than over 92% of the industry.
Vertex Pharmaceuticals (VRTX)
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Headquartered in Boston, Massachusetts, Vertex Pharmaceuticals (NASDAQ:VRTX) came to fame because it represented one of the first biotech firms to use an explicit strategy of rational drug design rather than combinatorial chemistry. Currently, the company invests in scientific innovation to create transformative medicines for people with serious diseases. These conditions include chronic pain, sickle cell disease, and muscular dystrophy.
As with United Therapeutics, Vertex ranks among the top-performing biotech stock picks for 2023. Since the January opener, VRTX gained over 44% of its equity value. It’s been on the move recently, with shares rising nearly 24% during the trailing half-year period. Notably, the company’s Q3 results came in above expectations. As well, management raised its sales outlook for 2022.
On the financial front, Vertex will likely attract investors because of its income-statement-related performance metrics. For instance, the company’s three-year revenue growth rate stands at 35.3%, beating out 78% of its rivals. Its net margin of 37.6% ranks better than nearly 94% of industry players.
Corcept Therapeutics (CORT)
Moving into the riskier segment of biotech stock picks for 2023, Corcept Therapeutics (NASDAQ:CORT) is a pharmaceutical company engaged in the discovery, development, and commercialization of drugs for the treatment of severe metabolic, psychiatric and oncologic disorders. Specifically, per its public profile, Corcept has focused on the adverse effects of excess cortisol, studying new compounds that may mitigate those effects.
Since the start of this year, CORT returned slightly over 13% of its equity value. So far, so good. However, in the trailing month, shares slipped over 6%. And in the trailing five sessions, CORT finds itself down over 7%. Contributing to the volatility is Corcept’s Q3 earnings report. While the company beat earnings estimates, it fell short on revenue.
For contrarians, CORT may represent a discounted opportunity. Per Gurufocus.com and its proprietary calculations for fair market value (FMV), CORT rates as modestly undervalued. However, the star of the show centers on fiscal stability. Corcept features a strong cash position and an Altman Z-Score of 28.54, reflecting extremely low bankruptcy risk. Thus, it’s worth consideration for top biotech stock picks for 2023.
Headquartered in Copenhagen, Denmark, Genmab (NASDAQ:GMAB) features six approved antibodies used in six market products. These cover cancer indications and autoimmune diseases. In addition, Genmab conducts research and development for the treatment of relapsing-remitting multiple sclerosis. At the moment, the company commands a market cap of $29.9 billion.
Representing another solid idea among biotech stock picks for 2023, GMAB returned 15.5% for shareholders since the January opener. Most of this upside performance came in the second half of 2022. In the trailing six months, Genmab shares gained a staggering 54% of market value. It’s still going strong, with its trailing one-month performance pinging at 11% up.
For the fundamental investors, Genmab is all about the income statement. Its three-year revenue growth rate stands at 38.1%, above 79% of competitors. Further, its net margin is 47%, ranked within the biotech sector’s top 5%. Finally, Genmab enjoys fiscal stability, particularly with its strong cash position. Thus, it’s one of the top biotech stock picks for 2023.
Novo Nordisk (NVO)
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Another Danish entry among biotech stock picks for 2023, Novo Nordisk (NYSE:NVO) manufactures and markets pharmaceutical products and services, specifically diabetes care medications and devices. In addition, the company specializes in hemostasis management, growth hormone therapy, and hormone replacement therapy. Presently, Novo carries a market cap of $222.5 billion, a massive stalwart.
Although NVO has been choppy throughout much of this year, investors are starting to come around to the opportunity. Since the beginning of the year, NVO gained over 17% of its equity value. However, in the trailing month, shares returned stakeholders 12%. Again, positive fundamental data contributed to the enthusiasm. Novo reported a Q3 net profit that beat expectations. Moreover, management raised the enterprise’s full-year guidance.
Financially, Gurufocus.com warns that NVO is significantly overvalued. However, prospective investors should also note that Novo features an ROE of 74.5%, a staggering figure. It also ranks within the top 2% of the industry. As well, Novo enjoys fiscal stability, with an Altman Z-Score of 9.28 reflecting very low bankruptcy risk.
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Perhaps the riskiest entry on this list of biotech stock picks for 2023, Bio-Techne (NASDAQ:TECH) calls Minneapolis, Minnesota home. The company develops, manufactures, and sells life science reagents, instruments, and services for the research, diagnostic, and bioprocessing markets. Essentially, it’s a stagehand manager, critically helping to keep the show running.
At the moment, Bio-Techne commands a market cap of $12.9 billion. However, the real issue is its YTD market performance. Since the January opener, TECH hemorrhaged nearly 33% of its equity value. Further, the near-term performance isn’t that great. For instance, in the trailing half-year period, shares dipped almost 8%. Still, they did gain 5% in the trailing month.
Despite the red ink in the market, it’s possible that contrarians might view TECH as a discounted play. Per Gurufocus.com’s FMV calculations, Bio-Techne is modestly undervalued. In addition, the biotech company features very solid figures for revenue growth and operating/net margins. On a final note, Bio-Techne’s Altman Z-Score is 14.54, reflecting a very low bankruptcy risk.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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