Workflow
2 Healthcare Stocks to Buy Hand Over Fist and 1 to Avoid
BNTXBioNTech SE(BNTX) The Motley Fool·2024-12-11 10:50

Core Viewpoint - The healthcare sector is considered a strong long-term investment due to the universal need for healthcare products and services, especially with aging populations increasing demand over the next decade [1] Group 1: BioNTech - BioNTech's revenue in Q3 2021 was over 6 billion euros (approximately 6.9billion),butitdroppedto1.24billioneuros(around6.9 billion), but it dropped to 1.24 billion euros (around 1.3 billion) in Q3 2024 due to decreased demand for its COVID-19 vaccine [2] - Despite declining revenue, BioNTech's COVID-19 revenue rebounded by 39% year over year in Q3, and the market is undervaluing its promising pipeline [3] - BioNTech plans to launch its first cancer therapy in 2026 and aims for regulatory approvals for 10 cancer indications by 2030, with two programs in late-stage testing and 12 in phase 2 trials [4] - The company's enterprise value is around 11.8billion,whichisonly4.5timestheexpected2024sales,comparedtotheaveragebiotechstocktradingatover7.7timessales,indicatingthatBioNTechisundervalued[5]Group2:TransMedicsGroup−TransMedicsGroup′ssharepricehadmorethandoubledyeartodatebyearlyAugustbuthassincedeclinedaftermissingQ3revenueandearningsestimates[6]−Theorgantransplantationmarketfaceschallengeswiththecurrentcoldstoragemethod,whichresultsinmanyorgansnotreachingrecipients[7]−TransMedics′OrganCareSystem(OCS)technologykeepsdonororgansaliveuntiltransplantationandistheonlywarmperfusiontechnologyapprovedbytheFDAformultipleorgans[8]−ThecompanyisaddressinglogisticalchallengesinorgantransplantswithitsownaviationfleetandisseekingregulatoryapprovalsforOCSinkeyEuropeancountries[9]Group3:WalgreensBootsAlliance−WalgreensBootsAlliance′sstockhassignificantlydeclined,downaround9011.8 billion, which is only 4.5 times the expected 2024 sales, compared to the average biotech stock trading at over 7.7 times sales, indicating that BioNTech is undervalued [5] Group 2: TransMedics Group - TransMedics Group's share price had more than doubled year to date by early August but has since declined after missing Q3 revenue and earnings estimates [6] - The organ transplantation market faces challenges with the current cold storage method, which results in many organs not reaching recipients [7] - TransMedics' Organ Care System (OCS) technology keeps donor organs alive until transplantation and is the only warm perfusion technology approved by the FDA for multiple organs [8] - The company is addressing logistical challenges in organ transplants with its own aviation fleet and is seeking regulatory approvals for OCS in key European countries [9] Group 3: Walgreens Boots Alliance - Walgreens Boots Alliance's stock has significantly declined, down around 90% from its peak in 2015, and currently trades at only 5.5 times forward earnings, which may indicate a value trap [10] - The company faces intense competition in the retail pharmacy market, particularly from Amazon and Walmart, along with a significant debt load exceeding 33.8 billion [11] - Although there are rumors of potential acquisition talks with private equity firm Sycamore Partners, relying on such speculation may not be prudent, and investors might be better off avoiding the stock for now [12]