It usually takes an event or a series of events for biotech stocks to ever look cheap compared to the overall market or even to sub-sectors within health care. They generally trade at higher multiples of revenues and with high P/E ratios, assuming they even have real sales-generated revenues and earnings. But in today’s climate there are many of the large key biotech stocks that are now trading with market-discounts on the P/E ratios and on multiples of revenues as valuation metrics. We ran a full screen for BioHealthInvestor.com and some of the key names that came up with low P/E and revenue multiples were Amgen Inc. (NASDAQ: AMGN), Biogen Idec Inc. (NASDAQ: BIIB), Cephalon Inc. (NASDAQ: CEPH), Cubist Pharmaceuticals Inc. (NASDAQ: CBST), Genzyme Corporation (NASDAQ: GENZ), and PDL BioPharma, Inc. (NASDAQ: PDLI).
There are generally some reasons that have gotten these to cheap screening levels, but some of these are showing significant value for a sector that usually commands a high-premium to most sectors. Amgen has recovered substantially from its woes, and Biogen has as well. Genzyme’s troubles allowed it to make the screen with some key caveats, and the valuation screens elsewhere showed that Cephalon, Cubist, and PDL are worth a look. All of these companies were also well above our screening threshold of $400 million in market cap and average volume of 250,000 shares or more. These all came in above $1 billion in market cap and most never see under 1 million shares per day in average volume.
The full story is available at BioHealthInvestor.com.
-The 24/7 Wall Street Team
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