After an incredible run, investors are finally seeing some pain in the biotech and broader health care sector. Major biotechnology indexes were off over 4% in Wednesday trading, while the short term trend has not been favorable either.
Some investors may now think that the bubble has burst for the high growth biotech sector, but there are actually still a few well-positioned companies in the space. In fact, the recent pullback could make for a nice buying opportunity if investors choose the biotech stocks which still have great growth prospects and strong earnings estimate revisions as of late.
Below, we highlight a trio of biotechnology stocks which have been under pressure lately but could still be excellent picks. All three have a growth score of at least ‘B’, and have a ‘buy’ rating as well, suggesting they are great selections for investors looking to dive in to the biotech space on this recent pullback:
Horizon Pharma PLC (NASDAQ:HZNP)
Horizon Pharma, Inc. is a biopharmaceutical company that is developing and commercializing medicines to target unmet therapeutic needs in arthritis, pain and inflammatory diseases. The company sits at a Zacks Rank #1 (Strong Buy) which means we are expecting it to outperform the market. The stock also has a Growth rating of 'A'; it should be an impressive choice for biotech investors in the near term. Horizon Pharma currently has a PE of 17.26.
Horizon Pharma has a projected EPS growth of 35.74% compared to that of its industry (MED-BIOMED/GENE) which is only at 5.88%. The company surprised in earnings season last quarter, trouncing our estimate by 17.39%. Our estimate called for an EPS of $0.23, but Horizon Pharma reported earnings of $0.27 per share. HZNP gives its next earnings report on 5/8/15.
NewLink Genetics Corp (NASDAQ:NLNK)
NewLink Genetics Corporation is a biopharmaceutical company which focuses on discovering, developing and commercializing immunotherapeutic products for cancer treatment. The company is at a Zacks Rank #2 (Buy) and should best the market over the next 1-3 months.
Like Horizon Pharma, the stock holds a Growth rating of ‘A,’ making it a solid biotech investment. NewLink Genetic holds a sold net margin of 59.6% compared to that of its industry (MED-BIOMED/GENE) which is at -153.51%.
Last quarter, the company reported earnings of $4.05 per share, surprising by an astounding 619.23%, as our estimate called for -$0.78 earnings per share. NewLink Genetic has also surprised in each of the last four quarters by an average of 175.67%. The company has a projected sales growth rate of 328.11%. NLNK reports its next earnings on 5/5/15.
Illumina, Inc. (NASDAQ:ILMN)
Illumina Inc. is a leading developer of next-generation tools for the large-scale analysis of genetic variation and function. The company's tools will provide information that could be used to improve drugs and therapies, customize diagnoses and treatment, and cure disease.
The company sits at a Zacks Rank #2 (Buy), making it an expected market outperformer. The stock holds a Growth rating of ‘B,’ which lets biotech investors know that it is a strong choice in the space. After all, the projected EPS growth rate for this security is 17.3%, crushing the industry average of 5.88%
The company has surprised in each of the four last quarters, holding an average surprise of 20.31%.
Last quarter, Illumina reported earnings of $0.87 per share, beating our estimate of $0.78 per share. The company has a projected sales growth rate of 21.82%, up from its industry’s (MED-BIOMED/GENE) growth rate of 6.69%. Illumina reports its next earnings on 4/28/15.