Valuation Models for Large Cap Biopharma Stocks
Can Robust Drug Pipelines Deliver Future EPS Growth?
This is a follow-up of our post on 1/8/16 Large Cap Biopharmaceuticals which looks at valuation models and stock performance of selected companies after the J.P.Morgan Healthcare Conference and then again after 2015 earnings reports over the next few weeks. Which metrics are important for value vs growth: PEG, PE, P/S, Dividend Yield etc? We have been in a bear market for biotechnology stocks since September 2015 despite a Q4 rally; now add to that the recent 2016 YTD correction of 16% bringing prices to pre-bubble lows. Many of the drivers of the biotech bull market are gone and now we have drug pricing concerns so valuations do matter.
- After 2015 earnings reports and 2016 guidance combined with Company presentations at J.P.Morgan we should be able to establish a new baseline for assessing valuations.
- Momentum in the sector has waned so fundamentals have become more important.
- Stocks with higher valuations have had bigger moves down ALXN,CELG. Except GILD?
- Investors bought biotech stocks anticipating higher growth in product sales.
- We look for large caps to outperform in 2016 as investors become more cautious and less speculative.
Best Performing Stocks After J.P.Morgan Conference-During a Bad Week
Abbvie (ABBV) flat– boosted by win in Humira patent challenge against Amgen (AMGN).
Amgen (Amgen) down 1%.
Biogen (BIIB) down 3.76%.
Here are Eight of the top large cap biopharma stocks with recent stock performance and selected financial metrics (Source- finviz.com) that will be updated by the end of the month.
The S&P currently at 1880 has EPS estimates in the range from $117 to $130. The current PE is 17 and yields 2.06%.
Top dividend yields of stocks below are as follows: ABBV 3.98%, AMGN 2.64%, BMY 2.42%, GILD 1.87%. Others nil.
| Company | Ticker | Price | Market | 2015 Rev | P/S | PEG | Q/Q Rev | EPS Q/Q | Stock Perf | Price | % Week | |
| 1/7/2016 | Cap | $B | Gr% | Gr% | %12 mos | 1/18/2016 | JPM | |||||
| Abbvie | ABBV | 57.21 | 93.74 | 21.9 | 4.28 | 1.86 | 18.4 | 138.7 | -11.16 | 57.32 | 0 | |
| Alexion | ALXN | 174.37 | 35.75 | 2.5 | 14.29 | 6.92 | 20.1 | -192 | -9.98 | 158.68 | -9 | |
| Amgen | AMGN | 152.98 | 114.13 | 21.46 | 5.32 | 1.93 | 13.8 | 51.6 | -4.5 | 151.35 | -1 | |
| Biogen | BIIB | 284.01 | 60.93 | 10.57 | 5.77 | 1.24 | 10.6 | 14.6 | -22.51 | 273.33 | -3.76 | |
| Bristol- MyersS | BMY | 65.27 | 104.74 | 16.53 | 6.34 | 3.16 | 3.8 | -2.3 | 0.75 | 62.78 | -3.8 | |
| Celgene | CELG | 111.89 | 80.97 | 8.78 | 9.22 | 2.22 | 17.8 | -106.6 | -15.39 | 103.06 | -7.89 | |
| Gilead Sciences | GILD | 96.25 | 132.36 | 31.45 | 4.21 | 0.6 | 37.3 | 83.2 | -8.81 | 91.84 | -4.58 | |
| Regeneron | REGN | 501.96 | 48.81 | 3.81 | 12.61 | 4.19 | 56.7 | 154.9 | 13.28 | 462.95 | -7.76 | |
| IBB | 304 | (10.6) | 284.18 | -5.93 | ||||||||
*BMY,CELG are not on our Focus list.
Disclosure: long ABBV,GILD