A Surprising GARP Opportunity Is Emerging in Mid‑Cap Biopharma
This play combines discounted entry and double‑digit upside potential as the company expands its product portfolio with new therapies.
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The stock market is coming off its third straight year of outsized gains. The probability of making it four in a row seems low, in my opinion.
The S&P 500 came into 2026 trading at just over 23 times forward earnings. Each time that has happened previously, the returns from equities annually over the next decade have been extremely paltry.
In addition, 2026 is a mid-term year. The last two times when markets posted a decline for the year happened in 2018 and 2022, both years with mid-term elections.
Given all that, I open 2026 with a quite cautious view on the overall market. My trading will reflect that in the quarters ahead, barring a significant pullback in stocks. My trade idea today embraces this stance fully.
BioMarin Pharmaceutical (BMRN) is a mid-cap biopharma name that is a true GARP (growth at a reasonable price) stock. It has a market cap of approximately $11.5 billion and the options against the equity have good liquidity.
The company currently markets eight products and is advancing multiple clinical programs comprised of new therapies and label expansion opportunities. Importantly, BioMarin will add two more products to "throw on the truck" when it completes its recent acquisition of Amicus Therapeutics (FOLD) . The investor community applauded the strategic move, boosting BioMarin’s stock, somewhat of a rare event for the acquirer in M&A deals.
The company’s growth had been powered by Voxzogo (vosoritide). This is a once-daily, subcutaneously injected C type natriuretic peptide [CNP] analog approved to increase linear growth in patients of any age with achondroplasia. Voxzogo was approved in 2021 and and is seeing sales growth of above 20%. It should do over $800 million in sales in 2025.
It should be noted, Voxzogo should face increasing competition for its current indication in the years ahead However, management believes over the longer term, Voxzogo is a pipeline-in-a-product. It is being evaluated for several other indications, one of which is in Phase 3 development. Four other programs should kick off pivotal trials in 2027.
The acquisition of Amicus added two new approved products that are a good fit with BioMarin’s current portfolio. They are both showing solid growth and have up to $1 billion peak annual sales potential. BioMarin did take on a good chunk of debt to acquire Amicus, but its balance sheet is still in good shape. There should be considerable synergies and expansion opportunities with the purchase, and it should soon be accretive.
Before the acquisition, the analyst community was expecting earnings of just over $3.50 per share in 2025, followed by over $5.25 per share on better than 10% sales growth in 2026. Revenues will get a large boost from the integration of Amicus.
With BMRN stock trading at around $60 a share, those are solid GARP valuations. In my trade strategy I am choosing an option strike price under the stock's current trading level given my pessimistic view of the overall market. Taking a strike price at the stock’s current trading level, provides a slightly higher return with less downside protection. Here is how I am adding to my position in BMRN.
Option Strategy
This is how one can initiate a holding in BMRN with a covered call order. As a reminder, covered-call orders involve buying an equity and simultaneously selling just out of the money call strikes against the new position.
Using the August $57.50 call strikes, fashion a covered call order with a net debit in the $51.25 to $51.75 a share range (net stock price - option premium).
This strategy provides downside protection of 14% with upside potential just over 11% for the option duration even if the stock trades down 4%.
At the time of publication, Jensen was long BMRN.
