Global equity markets have been rocked recently as fears of rising interest rates and tightening monetary possible make their way into the minds of the street. I’m not going to try to predict the Federal Reserve’s next move nor any other central bank. I would rather look for opportunity in the market during these times of turbulence. Earlier this year I owned an array of biotechnology names including Gilead Sciences, Inc. (NASDAQ:GILD), Celgene Corporation (NASDAQ:CELG), and Amgen, Inc. (NASDAQ:AMGN) before taking gains at the end of the first quarter. Since then, these names continued much higher before topping out this month. These stocks have been hit especially hard over the last week in line with the broad market.
Now does anyone actually think people are going to stop getting sick just because Bernanke cuts back his spending? Of course not, that’s why I’m looking for an opportunity to get back into these biotechnology companies on weakness. I would like to highlight three industry leading diversified biotechnology companies investors should consider on a broad market pullback.
I’ve been a fan of Gilead Sciences, Inc. (NASDAQ:GILD) for some time now. Management has taken a bold yet rewarding strategy in terms of research. The company focus its efforts on developing treatments to currently unmet but highly demanded illnesses. As of today, the company has its hands in everything from HIV, AIDS, Liver Disease, Cardiovascular, Respiratory, Oncology, and Inflammation. In every one of these categories Gilead Sciences, Inc. (NASDAQ:GILD) has at least one drug pending approval or in Phase 3 trials. Recently, I’ve focused my attention on companies with exposure to the growing diabetes epidemic taking over control. Gilead Sciences, Inc. (NASDAQ:GILD)’s medication Ranolazine, currently in Phase 3 trials, has already been approved for other uses but recently the company discovered its potential benefits for diabetics. Many diabetics face constant chest pains, however, with the use of Ranolazine these pains are likely to diminish greatly. Additionally, the company has 21 Phase 2 trials in the works which will allow the company continued growth in the years ahead. While the forward price to earnings multiple remains high, 25 times, this valuation can be easily justified. The PEG ratio sits below 1, at 0.98, which typically signals a buying opportunity. Analysts are expecting 10% growth this year, followed by 47.2% growth next year.
Up next, Celgene Corporation (NASDAQ:CELG), while shares have soared over 44% this year alone, shares have traded down just over 13% from its 52 week high. Like Gilead Sciences, Inc. (NASDAQ:GILD), Celgene Corporation (NASDAQ:CELG) has a deep pipeline of high quality treatments.
The company is making advancements across the medical sector with progress being seen in Myeloma, MDS, Acute Myeloid Luekemia, Lymphoma, Anemia, and Inflammation. In terms on cancer related progress, the company has 22 treatments awaiting FDA approval and an additional 12 treatments currently making ways through Phase 3 trials. As far as revenue streams go, the company has 7 products currently on the market. Its medication Vidaza, has held up especially well since losing patent protection. A generic alternative still hasn’t been fully developed leading me to believe the company will still reap benefits for another couple years. Similar to Gilead Sciences, Inc. (NASDAQ:GILD), Celgene Corporation (NASDAQ:CELG) has a remarkably low PEG ratio, 0.90, thus signalling the company’s growth potential is undervalued. Analysts are expecting strong, 20% earnings growth over the next two years, thereby justifying the 21 times forward earnings multiple.