In this article, I have evaluated prominent biotech stocks, Bionano Genomics, Inc. (BNGO) and Corcept Therapeutics Incorporated (CORT), to determine which could generate better returns. After thoroughly evaluating these stocks, I think CORT might be a superior choice for the reasons discussed in this article.
Due to the rise of the biotechnology sector in developing nations, the market is being driven by favorable government initiatives. The government activities aimed at streamlining the medication regulatory pathway, standardizing clinical studies, enhancing reimbursement policies, and expediting the product approval process, will provide the industry with lucrative growth potential.
The global biotechnology market is expected to be worth $3.21 billion by 2030, growing at a noteworthy CAGR of 12.8%.
Additionally, the expanding usage of biotech solutions has facilitated the production of therapeutic proteins and other drugs. As the prevalence of chronic diseases has increased, so has the demand for pharmaceutical discovery and development.
It is being used increasingly in numerous fields due to the broad nature of the application. The growing usage of organic products in agriculture is also helping to expand the market.
In terms of price performance, CORT is a clear winner with 13.8% gains over the past three months compared to BNGO’s 46.6% decline. Also, CORT has gained 17.7% year-to-date compared to BNGO’s 72.7% decline.
Here are the reasons why I think CORT might perform better in the near term:
Recent Developments
During the recent quarter, BNGO announced the Stratys system for high throughput optical genome mapping (OGM), which will enable a four-fold increase in raw data generation rate compared to the Saphyr instrument.
During the same quarter, BNGO announced VIA software, which replaces NxClinical software with a simple and integrated workflow for visualization, interpretation, and reporting for hematologic malignancies across OGM, microarray, and next-generation sequencing (NGS) data types for enhanced contextualization across multiple variant types and accelerated time to results at a reduced cost.
Conversely, on July 17, 2023, CORT announced topline results from a Phase 1b study evaluating its proprietary cortisol modulator, miricorilant, in patients with presumed non-alcoholic steatohepatitis (NASH).
Recent Financial Results
In the fiscal second quarter that ended June 30, 2023, BNGO’s total operating expenses increased 23.8% year-over-year to $41.55 million. Its loss from operations and net loss widened by 22.3% and 21.2% from the year-ago values to $39.24 million and $38.91 million, respectively.
On the contrary, CORT’s revenues for the fiscal second quarter ended June 30, 2023, rose 13.9% year-over-year to $117.72 million. The company’s net income increased marginally year-over-year to $27.53 million. Additionally, its net income per common share increased 4.2% year-over-year to $0.25.
Past And Expected Financial Performance
Over the past three years, BNGO’s revenue grew at a 55.3% CAGR. Analysts expect BNGO’s revenue to grow by 29.1% this year and 25.3% in the third quarter ending September 2023. However, its EPS is expected to be negative $4.24 this year, negative $1.00 in the current quarter ending September 2023, and negative $0.95 in the next quarter ending December 2024.
Conversely, CORT’s revenue has increased at a CAGR of 5.9% over the past three years. Its revenue is expected to increase by 1.2% this fiscal year ending January 2024. Its EPS is expected to be $0.79 this year, $0.27 in the to-be-reported second quarter ended July 2023, $0.12 in the current quarter ending October 2023, and $0.07 in the next quarter ending January 2024.
Valuation
BNGO’s forward P/S multiple of 3.93 is higher than CORT’s 0.33. Additionally, BNGO’s forward EV/Sales multiple of 2.08x is higher than CORT’s 0.52x.
Thus, CORT is relatively more affordable.
Profitability
BNGO's trailing-12-month levered FCF margin of negative 232.7% is lower than CORT’s 5.54%. In addition, BNGO’s trailing-12-month asset turnover ratio of 0.11x is lower than CORT’s 1.83x.
Furthermore, BNGO’s trailing-12-month ROCE, ROTC, and ROTA of negative 58.67%, 34.71%, and 53.99% are lower than CORT’s 37.57%, 10.78%, and 9.71%, respectively.
Thus, CORT is more profitable.
POWR Ratings
BNGO has an overall rating of F, which equates to a Strong Sell in our proprietary POWR Ratings system. Conversely, CORT has an overall rating of B, translating to a Buy. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. BNGO has an F grade for Quality. Its trailing-12-month gross profit margin of 25.35% is 54.2% lower than the industry average of 55.37%. Its trailing-12-month asset turnover ratio of 0.11x is 71.5% lower than the industry average of 0.37x.
On the other hand, CORT has an A grade for Quality. Its trailing-12-month gross profit margin of 39.72% is 12.2% higher than the industry average of 35.41%. Its trailing-12-month asset turnover ratio of 1.83x is 83.4% higher than the industry average of 1.00x.
Among the 390 stocks in the Biotech industry, BNGO is ranked #371, while CORT is ranked #12.
Beyond what we’ve stated above, we have also rated both stocks for Growth, Value, Momentum, Sentiment, and Stability. Get all BNGO ratings here. Click here to view CORT ratings.
The Winner
The rising prevalence of chronic illnesses is one of the primary factors expected to drive the biotechnology market growth. Also, the market is propelled by significant government support in the form of measures targeted at modernizing the regulatory framework, improving approval processes and reimbursement policies, and standardizing clinical research. Industry players BNGO and CORT are expected to benefit from these industry tailwinds.
However, BNGO's poor profitability, elevated valuation multiples, and high beta value makes its competitor CORT the better buy.
Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Biotech here.
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CORT shares were unchanged in premarket trading Monday. Year-to-date, CORT has gained 51.99%, versus a 17.41% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
The post Which Stock Do Investors Consider a Heathier Investment: Bionano Genomics (BNGO) vs. Corcept Therapeutics (CORT) appeared first on StockNews.com