NEW YORK (TheStreet) -- The biotech sector has been one of the best performing sectors this year. While the Nasdaq Composite rose 5.3% for the first six months of the year, the Nasdaq Biotech Index rose a whopping 21.6% as of June 30. In comparison the S&P 500 Index barely eked out a positive return for the first two quarters.
Even within the red-hot biotech sector, there are superior performers. Here they are.
TheStreet paired each of these tickers with TheStreet Ratings to let you know if you should buy, sell, or hold these best performing stocks. (Note: Because of TheStreet Ratings parameters, not all stocks on this list have a rating.)
TheStreet Ratings, TheStreet's proprietary ratings tool, projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.
Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.
Check out which stocks were among the best performers to date, counting down from 10 to one.
KYTH data by YCharts10. Kythera Biopharmaceuticals (KYTH)
Rating: N/A
Market Cap: $1.9 billion
Year-to-date return: 117.2%
KYTHERA Biopharmaceuticals, Inc. is a "clinical stage biopharmaceutical company focused on the discovery, development and commercialization of novel prescription products for the aesthetic medicine market. KYTHERA also maintains an active research interest in hair and fat biology, pigmentation modulation and facial contouring," according to its Web site.
RARE data by YCharts9. Ultragenyx Pharmaceutical (RARE)
Rating: N/A
Market Cap: $3.7 billion
Year-to-date return: 133.3%
Ultragenyx is a "clinical-stage biotechnology company committed to bringing to market novel products for the treatment of rare and ultra-rare diseases, with an initial focus on serious, debilitating genetic diseases. Founded in 2010, the company has rapidly built a diverse portfolio of product candidates with the potential to address diseases for which the unmet medical need is high, the biology for treatment is clear, and for which there are no approved therapies," according to its Web site.
HALO data by YCharts8. Halozyme Therapeutics, Inc. (HALO)
Rating: Sell, D
Market Cap: $2.8 billion
Year-to-date return: 134%
Halozyme Therapeutics, Inc., a biotechnology company, researches, develops, and commercializes human enzymes.
"We rate HALOZYME THERAPEUTICS INC (HALO) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Biotechnology industry and the overall market, HALOZYME THERAPEUTICS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The debt-to-equity ratio of 1.32 is relatively high when compared with the industry average, suggesting a need for better debt level management. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 5.20, which shows the ability to cover short-term cash needs.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Biotechnology industry average, but is greater than that of the S&P 500. The net income increased by 43.1% when compared to the same quarter one year prior, rising from -$26.55 million to -$15.11 million.
- Net operating cash flow has increased to -$13.84 million or 21.50% when compared to the same quarter last year. Despite an increase in cash flow of 21.50%, HALOZYME THERAPEUTICS INC is still growing at a significantly lower rate than the industry average of 157.15%.
- This stock has increased by 103.94% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in HALO do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
- You can view the full analysis from the report here: HALO Ratings Report
IMGN data by YCharts7. ImmunoGen, Inc. (IMGN)
Rating: Sell, D-
Market Cap: $1.2 billion
Year-to-date return: 135.7%
ImmunoGen, Inc., a biotechnology company, develops targeted anticancer therapeutics. It develops its products using its antibody-drug conjugates technology. The company offers Kadcyla, an antibody-drug conjugate for the treatment of HER2-positive metastatic breast cancer.
"We rate IMMUNOGEN INC (IMGN) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been an overall disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Biotechnology industry and the overall market, IMMUNOGEN INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Biotechnology industry average, but is greater than that of the S&P 500. The net income increased by 42.3% when compared to the same quarter one year prior, rising from -$37.45 million to -$21.62 million.
- Looking at where the stock is today compared to one year ago, we find that it is higher, and it has outperformed the rise in the S&P 500 over the same period. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- IMMUNOGEN INC has improved earnings per share by 43.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, IMMUNOGEN INC continued to lose money by earning -$0.84 versus -$0.87 in the prior year. This year, the market expects an improvement in earnings (-$0.71 versus -$0.84).
- Net operating cash flow has significantly increased by 157.59% to $7.55 million when compared to the same quarter last year. In addition, IMMUNOGEN INC has also modestly surpassed the industry average cash flow growth rate of 157.15%.
- You can view the full analysis from the report here: IMGN Ratings Report
ANAC data by YCharts6. Anacor Pharmaceuticals, Inc. (ANAC)
Rating: Sell, D
Market Cap: $3.5 billion
Year-to-date return: 140.1%
Anacor Pharmaceuticals, Inc., a biopharmaceutical company, focuses on discovering, developing, and commercializing novel small-molecule therapeutics derived from its boron chemistry platform. It markets KERYDIN (tavaborole) topical solution for the treatment of onychomycosis of the toenails.
"We rate ANACOR PHARMACEUTICALS INC (ANAC) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been an overall disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Biotechnology industry and the overall market, ANACOR PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Biotechnology industry average, but is greater than that of the S&P 500. The net income increased by 38.8% when compared to the same quarter one year prior, rising from -$21.17 million to -$12.96 million.
- ANACOR PHARMACEUTICALS INC has improved earnings per share by 41.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ANACOR PHARMACEUTICALS INC swung to a loss, reporting -$2.07 versus $1.82 in the prior year. This year, the market expects an improvement in earnings (-$1.16 versus -$2.07).
- Net operating cash flow has significantly increased by 127.94% to $5.68 million when compared to the same quarter last year. Despite an increase in cash flow, ANACOR PHARMACEUTICALS INC's cash flow growth rate is still lower than the industry average growth rate of 157.15%.
- ANAC's debt-to-equity ratio of 0.78 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 4.39 is very high and demonstrates very strong liquidity.
- You can view the full analysis from the report here: ANAC Ratings Report
PRTA data by YCharts5. Prothena Corporation plc (PRTA - Get Report)
Rating: Hold, C-
Market Cap: $1.6 billion
Year-to-date return: 153.7%
Prothena Corporation plc, a late-stage clinical biotechnology company, focuses on the discovery, development, and commercialization of protein immunotherapy programs for the treatment of diseases that involve amyloid or cell adhesion in Ireland.
"We rate PROTHENA CORP PLC (PRTA) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, PRTA's share price has jumped by 141.02%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- PRTA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 29.47, which clearly demonstrates the ability to cover short-term cash needs.
- PRTA, with its very weak revenue results, has greatly underperformed against the industry average of 22.1%. Since the same quarter one year prior, revenues plummeted by 98.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Biotechnology industry and the overall market, PROTHENA CORP PLC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$14.72 million or 182.26% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: PRTA Ratings Report
EXEL data by YCharts4. Exelixis Inc. (EXEL)
Rating: N/A
Market Cap: $693 million
Year-to-date return: 161%
Exelixis is a biopharmaceutical company focused on "developing and commercializing small molecule therapies with the potential to improve the treatment of cancer," according to its Web site.
HZNP data by YCharts3. Horizon Pharma plc (HZNP - Get Report)
Rating: Sell, D
Market Cap: $5.4 billion
Year-to-date return: 169.5%
Horizon Pharma plc, a specialty biopharmaceutical company, engages in identifying, developing, acquiring or in-licensing, and commercializing medicines for the treatment of arthritis, pain, inflammatory, and/or orphan diseases in the United States and internationally.
"We rate HORIZON PHARMA PLC (HZNP) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly decreased to -$70.74 million or 9244.64% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The gross profit margin for HORIZON PHARMA PLC is currently very high, coming in at 93.49%. Regardless of HZNP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HZNP's net profit margin of -17.28% significantly underperformed when compared to the industry average.
- Compared to other companies in the Pharmaceuticals industry and the overall market, HORIZON PHARMA PLC's return on equity significantly trails that of both the industry average and the S&P 500.
- HORIZON PHARMA PLC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HORIZON PHARMA PLC reported poor results of -$3.70 versus -$2.29 in the prior year. This year, the market expects an improvement in earnings ($1.20 versus -$3.70).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Pharmaceuticals industry average. The net income increased by 90.5% when compared to the same quarter one year prior, rising from -$206.25 million to -$19.55 million.
- You can view the full analysis from the report here: HZNP Ratings Report
RTRX data by YCharts2. Retrophin, Inc. (RTRX - Get Report)
Rating: N/A
Market Cap: $1.2 billion
Year-to-date return: 170.8%
Retrophin, Inc., a biopharmaceutical company, focuses on the development, acquisition, and commercialization of therapies for the treatment of serious, catastrophic, or rare diseases.
"We rate RETROPHIN INC (RTRX) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The area that we feel has been the company's primary weakness has been its generally higher debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite currently having a low debt-to-equity ratio of 0.50, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.32 is sturdy.
- Compared to other companies in the Biotechnology industry and the overall market, RETROPHIN INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has increased to -$7.33 million or 25.21% when compared to the same quarter last year. Despite an increase in cash flow of 25.21%, RETROPHIN INC is still growing at a significantly lower rate than the industry average of 157.15%.
- RETROPHIN INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, RETROPHIN INC reported poor results of -$6.15 versus -$2.27 in the prior year. This year, the market expects an improvement in earnings ($0.29 versus -$6.15).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Biotechnology industry. The net income increased by 152.3% when compared to the same quarter one year prior, rising from -$75.74 million to $39.66 million.
You can view the full analysis from the report here: RTRX Ratings Report
SGYP data by YCharts1. Synergy Pharmaceuticals Inc. (SGYP)
Rating: N/A
Market Cap: $862 million
Year-to-date return: 172%
Synergy Pharmaceuticals, Inc., is a New York City based biopharmaceutical firm specializing in creating new drugs to treat gastrointestinal disorders, including irritable bowel syndrome. The company has promising drugs in Phase III and Phase II clinical trials.
By Jon Kostakopoulos
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