As the bell rang to signal the end of Thursday’s session, shares of BioMarin Pharmaceutical (NASDAQ: BMRN)
were trading up almost 6% from Wednesday’s close. This made the $16 billion biotech company the S&P 500’s top performer of the day and means that its stock is now up over 40% since the start of last October.
When your key internal metrics are growing by double-digit percentages year over year, that’s an easy thing to do.
The company’s last earnings report was towards the end of October and painted a good picture of an engine that’s running smoothly. Net income was up 536%, revenue was up 18% and sales were up 17%, all year over year. Unsurprisingly, the headline figures all topped analyst expectations.
Much of the forward momentum that’s starting to come into play is coming from the development and blossoming of the company’s drug pipeline that’s focused primarily on treating rare, genetic diseases. The company’s CEO, Jean-Jacques Bienaimé, said as much when he commented that "BioMarin is entering a stage that I believe will bring significant growth as we get closer to submitting marketing applications for valoctocogene roxaparvovec for severe hemophilia A and a pivotal data read-out for vosoritide for children with achondroplasia. These potential new products, combined with our strong base business and continued financial discipline, position us for significant growth and expansion beginning in the very near future. We are very pleased with the level of engagement we have had with global health authorities, as it aligns with our belief that gene therapy will be the next wave of innovation for treating people with severe hemophilia A."
Fall From Grace
These results have allowed investors to breathe a little easier after the company missed expectations in August’s Q2 report. Many on Wall Street will be hoping the company is able to reclaim the heights it saw in the biotech heydays of June and July 2015 when shares were trading at a 70% premium to Thursday’s closing price. The subsequent 50% fall from grace into 2016 was nothing out of the ordinary however as the biotech bubble burst. XBI, the benchmark biotech index, for example lost more than 50% of its value. Considering that individual stocks tend to move more aggressively (in either direction) than the indices, it could have been a lot worse for BioMarin.
That being said, however, while BioMarin shares have consolidated in the years since they have struggled to recover the territory lost in 2015 unlike XBI and many of their peers. BioMarin has been largely range-bound while XBI is close to printing fresh all-time highs after setting them in the summer of 2018. Even Vertex shares (NASDAQ: VRTX), who lost 50% of their value in 2015 have left those days behind them and are up over 200% from the lows of the selloff.
Those interested in getting involved in biotech and pharma stocks have lots of options depending on what they’re looking for. Some of the bigger names like Johnson & Johnson (NYSE: JNJ) are trading close to all-time highs for those looking for strong momentum while others like AbbVie (NYSE: ABBV) are still fighting to get back to the highs of yesteryear and offer the potential for a turnaround story.
As we head into 2020, BioMarin shares do look eager to test the high end of the range they’ve been bouncing around in since 2016. We saw a bullish MACD crossover at the start of November and RSI is at a healthy 65. There’s about a 10% move needed to test near term resistance at $105. If the bulls can break through that, consolidate and start to move higher, we’ll get an idea if BioMarin shares can start living up to their potential. Last October’s report suggests that they can and the investors will be hoping that their next earnings report, due this month, confirms it.
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