Radius Health, Inc. (RDUS) in Waltham, Mass., is a biopharmaceutical company that is focused on addressing unmet medical needs in bone health, orphan diseases, and oncology. Its lead product, TYMLOS, is an abaloparatide injection to treat postmenopausal women with osteoporosis at high risk for fracture.
The COVID-19 pandemic has highlighted the limitations of global healthcare. Biotechnology stocks have garnered significant investor interest since the onset of the public health crisis due to these companies’ role in developing treatments and vaccines to fight the virus. Furthermore, scientific breakthroughs in biotechnology have enabled new ways of treating and preventing diseases. And according to a Precedence Research report, the biotechnology market is expected to reach $1.68 trillion by 2030, growing at a 8.7% CAGR. Given RDUS’ strong fundamentals, we think it is well-positioned to capitalize on the industry’s solid growth prospects.
The stock has gained 31.4% in price over the past three months and 20.8% year-to-date to close the last trading session at $8.36.
Click here to checkout our Healthcare Sector Report for 2022
Here is what could influence RDUS’ performance in the upcoming months:
Robust Financials
RDUS’ total revenue increased 3.7% year-over-year to $65.10 million for the fourth quarter, ended Dec. 31, 2021. The company’s loss from operations narrowed 17.2% year-over-year to $11.76 million. Also, its net loss narrowed 27.1% year-over-year to $15.58 million. In addition, its adjusted EBITDA loss narrowed 71.4% year-over-year to $2.39 million.
Favorable Analyst Estimates
Analysts expect RDUS’ EPS for its fiscal year 2023 to increase 1,766.7% and 13%, respectively, year-over-year to $0.50 and $280.67 million. Its EPS is expected to grow 29.6% per annum over the next five years. Furthermore, Wall Street analysts expect the stock to hit $11.67 in the near term, indicating a potential 39.5% upside.
High Profitability
In terms of trailing-12-month gross profit margin, RDUS’ 92.02% is higher than the 55.47% industry average. Furthermore, its 4.43% trailing-12-month levered FCF compares with a negative industry average.
Reasonable Valuations
In terms of forward EV/S, RDUS’ 2.55x is 43.1% lower than the 4.49x industry average. Likewise, its 1.59x forward P/S is 68.8% lower than the 5.11x industry average.
POWR Ratings Show Promise
RDUS has an overall B rating, which equates to a Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. RDUS has a B grade for Growth. This is justified given its revenue and earnings growth estimates.
RDUS also has a B grade for Quality, which is consistent with its 1.23% trailing-12-month asset turnover ratio, which is 259.6% higher than the 0.34% industry average.
Furthermore, it has a B grade for Value, which is in sync with its 1.59x forward P/S, which is 68.8% lower than the 5.11x industry average.
RDUS is ranked #32 among 173 stocks in the Medical - Pharmaceuticals industry. Click here to access RDUS’ ratings for Momentum, Stability, and Sentiment.
Note that RDUS is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Stocks Under $10 portfolio. Learn more here.
Bottom Line
With growing investments in research and development, the biotech industry is poised for growth. So, we think it could be wise to bet on RDUS given its higher than industry profitability, reasonable valuation, and revenue and earnings growth prospects.
How Does Radius Health, Inc. (RDUS) Stack Up Against its Peers?
RDUS has an overall POWR Ratings of B. One could also check out these other stocks within the Medical – Pharmaceuticals industry with an A (Strong Buy) rating: Novartis AG (NVS), Johnson & Johnson (JNJ), and Merck & Co., Inc. (MRK).
Click here to checkout our Healthcare Sector Report for 2022
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RDUS shares were trading at $8.69 per share on Wednesday morning, up $0.33 (+3.95%). Year-to-date, RDUS has gained 25.58%, versus a -7.43% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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