5 Cash Heavy Large Cap Biotechnology Stocks That Analysts Rate As Buy
Biotech is a hot sector with high risk and high rewards, and when a biotech company has strong cash reserves, it has a unique advantage over its peers. Having cash to spend allows a company to invest in R&D, or make smart, strategic investments in innovative companies or technologies that could possibly fuel the next revolution in biotech. Today, we focus on biotech companies with plenty of cash, focusing further on those that analysts consider a 'Buy'.
The Current ratio is a liquidity ratio used to determine a company's financial health. The metric illustrates how easily a company can pay back its short obligations all at once through current assets. A company that has a current ratio of one or less is generally a liquidity red flag. Now this doesn't mean the company will go bankrupt tomorrow, but it also doesn't bode well for the company, and may indicate that it could have an issue paying back upcoming obligations.
The Quick ratio measures a company's ability to use its cash or assets to extinguish its current liabilities immediately. Quick assets include assets that presumably can be converted to cash at close to their book values. A company with a Quick Ratio of less than 1 cannot currently pay back its current liabilities. The quick ratio is more conservative than the Current Ratio because it excludes inventory from current assets, since some companies have difficulty turning their inventory into cash. If short-term obligations need to be paid off immediately, sometimes the current ratio would overestimate a company's short-term financial strength. In general, the higher the ratio, the greater the company's liquidity (i.e., the better able to meet current obligations using liquid assets).
We first looked for large cap biotechnology stocks. We then looked for companies that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3). We then looked for companies that have strong liquidity (Current Ratio>2)(Quick Ratio>2).
Do you think these large-cap stocks will continue to see such strong profitability? Use this list as a starting-off point for your own analysis.
1) Alexion Pharmaceuticals, Inc. (ALXN)
| Sector: | Healthcare |
| Industry: | Biotechnology |
| Market Cap: | $16.83B |
| Beta: | 0.54 |
Alexion Pharmaceuticals, Inc. has an Analyst Rating of 1.80 and Current Ratio of 2.30 and Quick Ratio of 2.03. The short interest was 1.95% as of 06/04/2012. Alexion Pharmaceuticals, Inc., a biopharmaceutical company, engages in the innovation, development, and commercialization of life-transforming therapeutic products for treating patients with severe and ultra-rare disorders in the United States, Europe, Latin America, Japan, and the Asia Pacific. It focuses on developing products for the treatment of diseases in the areas of hematology, nephrology, neurology, metabolic disorders, oncology, and ophthalmology. The company offers Soliris(eculizumab), a therapeutic product for the treatment of patients with paroxysmal nocturnal hemoglobinuria (PNH), a blood disorder; and atypical hemolytic uremic syndrome (aHUS), an ultra-rare and life-threatening genetic disease.
2) Vertex Pharmaceuticals Incorporated (VRTX)
| Sector: | Healthcare |
| Industry: | Biotechnology |
| Market Cap: | $12.57B |
| Beta: | 0.35 |
Vertex Pharmaceuticals Incorporated has an Analyst Rating of 1.90 and Current Ratio of 4.02 and Quick Ratio of 3.66. The short interest was 3.50% as of 06/04/2012. Vertex Pharmaceuticals Incorporated engages in discovering, developing, manufacturing, and commercializing small molecule drugs for the treatment of serious diseases worldwide.
The company's products include telaprevir, a prescription medicine used for the treatment of patients with genotype 1 hepatitis C virus (HCV) infection; and Ivacaftor, a prescription medicine used for the treatment of cystic fibrosis. The company markets its products under the INCIVEK brand name in the United States and Canada; INCIVO brand in the United Kingdom, Germany, France, Sweden, Austria, Finland, Denmark, Switzerland, and Norway; KALYDECO brand in the United States; and the TELAVIC brand in Japan.
3) Amgen Inc. (AMGN)
| Sector: | Healthcare |
| Industry: | Biotechnology |
| Market Cap: | $52.69B |
| Beta: | 0.44 |
Amgen Inc. has an Analyst Rating of 2.50 and Current Ratio of 3.24 and Quick Ratio of 2.94. The short interest was 1.86% as of 06/04/2012. Amgen Inc., a biotechnology medicines company, discovers, develops, manufactures, and markets human therapeutics based on advances in cellular and molecular biology for grievous illnesses primarily in the United States, Europe, and Canada.
The company markets recombinant protein therapeutics in supportive cancer care, nephrology, and inflammation. Its principal products include Aranesp and EPOGEN erythropoietic-stimulating agents that stimulate the production of red blood cells; Neulasta and NEUPOGEN to stimulate the production of neutrophils, which is a type of white blood cell that helps the body to fight infections; and Enbrel, an inhibitor of tumor necrosis factor that plays a role in the body's response to inflammatory diseases.
4) Regeneron Pharmaceuticals, Inc. (REGN)
| Sector: | Healthcare |
| Industry: | Biotechnology |
| Market Cap: | $11.79B |
| Beta: | 1.15 |
Regeneron Pharmaceuticals, Inc. has an Analyst Rating of 2.10 and Current Ratio of 4.35 and Quick Ratio of 4.18. The short interest was 7.01% as of 06/04/2012. Regeneron Pharmaceuticals, Inc., a biopharmaceutical company, discovers, develops, and commercializes medicines for the treatment of serious medical conditions in the United States.
The company's commercial products include EYLEA (aflibercept) Injection for the treatment of neovascular age-related macular degeneration; and ARCALYST (rilonacept) injection for subcutaneous use for the treatment of cryopyrin-associated periodic syndromes, including familial cold auto-inflammatory syndrome and muckle-wells syndrome in adults and children. Its products under Phase III clinical development stage consists of EYLEA for the treatment of serious eye diseases; ZALTRAP (Aflibercept), which is developed in oncology; and ARCALYST for the prevention of gout flares in patients initiating uric acid-lowering treatment.
5) Celgene Corporation (CELG)
| Sector: | Healthcare |
| Industry: | Biotechnology |
| Market Cap: | $28.78B |
| Beta: | 0.52 |
Celgene Corporation has an Analyst Rating of 1.90 and Current Ratio of 3.71 and Quick Ratio of 3.51. The short interest was 1.39% as of 06/04/2012. Celgene Corporation, a biopharmaceutical company, discovers, develops, and commercializes various therapies to treat cancer and immune-inflammatory related diseases primarily in the United States and Europe.
The company's commercial stage products include REVLIMID, an oral immunomodulatory drug for the treatment of patients with multiple myeloma and myelodysplastic syndromes (MDS); VIDAZA, a pyrimidine nucleoside analog to treat various subtypes MDS and acute myeloid leukemia; and THALOMID for patients with multiple myeloma, and for the prevention and suppression of the cutaneous manifestation of erythema nodosum leprosum recurrence. It also offers ABRAXANE to treat metastatic breast cancer; and ISTODAX for the treatment of cutaneous and peripheral T-cell lymphoma.
*Company profiles were sourced from Finviz. Financial data was sourced from Finviz.
By Zeta Cap
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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