These Three Biopharma Stocks Are Second-Quarter Standouts
Let's see which biotech holdings solidly beat Q2 expectations and why you should consider them.
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Second-quarter results continue to hit the wires with a machine gun’s staccato. The past week has been a particularly busy one for the biotech and biopharma companies that are well represented within my portfolio. In today’s column, I will highlight some of these names that have stood out this quarter that I plan to continue to accumulate via covered-call orders.
Let’s start with drug giant Pfizer PFE, a name I highlighted as my covered-call trade of the week last month. Pfizer posted Q2 results yesterday. It was one of the company’s best quarters in recent memory and this member of big pharma is finally putting its Covid cliff behind it. Not only did bottom-line numbers beat expectations by some 20 cents a share, but revenues posted better than 10% year-over-year growth. Besting the consensus by over $1 billion. Management also raised its full-year guidance for earnings. Finally, management expects to deliver $4.5 billion in cumulative annual cost saving by the end of this year through a large operational efficiency push. The stock is still cheap with a single-digit price-to-earnings and near 7% dividend yield.
In May, I highlighted two small cap biopharma companies I was adding to after recent dips in their stocks. Both names rewarded that faith this week as they posted much better than expected second quarter numbers. Ardelyx ARDX reported second-quarter numbers on Monday. It posted a small loss, almost half that of expectations. More importantly, revenues grew by 33% on a year-over-year basis to just under $98 million. This was more than $15 million above the existing consensus.
Revenue growth was driven by the company’s drug Ibsrela, which is seeing huge demand. Management boosted full year sales guidance and reiterated it believes its two products on the market can eventually achieve $1 billion in annual peak sales combined. The stock’s market cap is approximately $1.25 billion. A couple of analyst firms have boosted their price targets slightly on the stock since these results were posted.
In that same article, I also gave a shout out to a small-cap oncology name Syndax Pharmaceuticals SNDX. The company also crushed second-quarter expectations on Monday. Revenues came in at $38 million, more than $10 million over the consensus. Both of its recently Food and Drug Administration-approved drugs, Revuforj and Niktimvo, are seeing impressive traction.
Both Revuforj and Niktimvo are being evaluated for additional indications. Management boosted its potential market for these two compounds to $10 billion from just $4 billion previously. Revufori should be approved for another indication in October when its supplemental new drug application gets an FDA blessing. Leadership also pledged to keep operational expenses flat in coming years. Based on sales traction, the company should achieve profitability in fiscal 2028, a year earlier than previously expected. Syndax Pharmaceuticals has over $500 million in cash and marketable securities on its balance sheet and a market cap of approximately $1.1 billion. Second quarter results have already triggered several upward price target revisions within the analyst firm community.
At the time of publication, Jensen was long ARDX, PFE, and SNDX
