Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 stocks made the list for top value stocks in the Biotechnology & Medical Research industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Latest Biotechnology & Medical Research Stock News

Before choosing which top Biotechnology & Medical Research stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

The Biotechnology and Medical Research sub-industry has a positive outlook, a historically defensive sub-industry. Drug sales are anticipated to have high growth, primarily driven by COVID-19 therapeutics, the continued adoption of many new and innovative therapies, a favorable M&A environment, and a low prevalence of patent expirations in 2022. Additionally, companies could see prescription growth pick up as in-person physician visits return to pre-pandemic levels. As COVID-19 variants have emerged, vaccine boosters have been offered in order to increase efficacy. Due to this, repeat vaccinations will likely be necessary for lifelong immunity which would provide a long-lasting and significant source of revenue for lead vaccine developers. Aside from vaccines, the biotech industry is dependent on the volume of new therapy approvals. The FDA’s heavy focus on COVID-19 could slow the approvals on non-COVID-19 therapies. Despite this, the biotech industry will likely see promising sales growth over the next five years as it usually takes at least five years for new drugs to reach peak sales levels. Approval activity has also been on the rise recently. Mergers and acquisitions activity is expected to remain low as a more activist Federal Trade Commission (led by Lina Khan) could be more skeptical of proposed mergers. Year to date through June 30, the S&P 1500 Biotech Index was down 1.6%, vs. a 20.5% decline for the S&P 1500 Composite Index. In 2021, the Biotech Index rose 8.2%, vs. a 26.7% gain for the Composite Index.

Why Focus on Undervalued Biotechnology & Medical Research Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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5 Undervalued Biotechnology & Medical Research Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Biotechnology & Medical Research industry for Monday, February 06, 2023. Let’s take a closer look at their individual scores to see how they measure up against each other and the Biotechnology & Medical Research industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

AEterna Zentaris Inc. (USA)’s Value Grade

Value Grade:

Aeterna Zentaris Inc. is a specialty biopharmaceutical company, which is engaged in commercializing and developing therapeutics and diagnostic tests. The Company's lead product, Macrilen (macimorelin), is an oral test indicated for the diagnosis of patients with adult growth hormone deficiency (AGHD). Macrilen (macimorelin) is an orally available peptidomimetic ghrelin receptor agonist that stimulates the secretion of growth hormone by binding to the ghrelin receptor (GHSR-1a) and has uses in both endocrinology and oncology indications. The Company is also leveraging the clinical and compelling safety profile of macimorelin to develop it for the diagnosis of childhood-onset growth hormone deficiency (CGHD). It is also developing oral prophylactic bacterial vaccines against each of SARS-CoV-2, the virus that causes COVID-19, and Chlamydia Trachomatis. The Company focuses on the commercialization of macimorelin in Asia and the rest of the world.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

AEterna Zentaris Inc. (USA) has a Value Score of 84, which is considered to be undervalued.

When you look at AEterna Zentaris Inc. (USA)’s price-to-sales ratio at 2.80 compared to the industry median at 10.93, this company has a lower price relative to revenue compared to its peers. This could make AEterna Zentaris Inc. (USA)’s stock more attractive for value investors.

Now, let’s assess AEterna Zentaris Inc. (USA)’s EV/EBITDA ratio, also known as enterprise multiple. At 1.9, when compared to the industry median of 0.8, the company may be considered overvalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. AEterna Zentaris Inc. (USA)’s shareholder yield is higher than its industry median ratio of (5.16%). Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. AEterna Zentaris Inc. (USA)’s price-to-book ratio is lower than its industry median ratio of 1.83. This could make AEterna Zentaris Inc. (USA) more attractive to investors looking for a new addition to their portfolio.

Codiak BioSciences Inc’s Value Grade

Value Grade:

Codiak BioSciences, Inc. is a clinical-stage biopharmaceutical company. The Company is focused on the development of exosome-based therapeutics. The Company has developed its engineering and manufacturing platform, engEx Platform, to develop upon the innate properties of exosomes to design, engineer and manufacture exosome therapeutics. It utilizes the engEx Platform to generate a pipeline of engineered exosomes (engEx) exosomes, focused at treating a range of diseases, including oncology, neuro-oncology, neurology, neuromuscular disease and infectious disease. The Company's product candidates, exoSTING and exoIL-12, are developed to address solid tumors. The Company's program, exoSTING, is an exosome therapeutic candidate engineered with its engEx Platform to carry stimulator of interferon genes (STING) agonist inside the lumen of the exosome while expressing prostaglandin F2 receptor negative regulator (PTGFRN).

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Codiak BioSciences Inc has a Value Score of 87, which is considered to be undervalued.

Codiak BioSciences Inc’s price-to-book ratio is higher than its peers. This could make Codiak BioSciences Inc less attractive for value investors when compared to the industry median at 1.83.

You can read more about Codiak BioSciences Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Dermata Therapeutics Inc’s Value Grade

Value Grade:

Dermata Therapeutics, Inc. is a clinical-stage medical dermatology company. The Company is focused on identifying, developing, and commercializing pharmaceutical product candidates for the treatment of medical and aesthetic skin conditions and diseases. Its products candidates, DMT310 and DMT410. Its lead product candidate DMT310, is intended to utilize its Spongilla technology for a once weekly treatment of a variety of skin diseases with its initial focus being for the treatment of acne vulgaris. DMT310 is in Phase II clinical trial for the treatment of rosacea. Its second product candidate utilizing its Spongilla technology is its combination treatment, DMT410. DMT410 is intended to consist of one treatment of its sponge powder followed by one topical application of botulinum toxin for delivery into the dermis. DMT410 Phase I POC trial of DMT410 for the treatment of multiple aesthetic skin conditions.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Dermata Therapeutics Inc has a Value Score of 76, which is considered to be undervalued.

Dermata Therapeutics Inc’s price-to-book ratio is higher than its peers. This could make Dermata Therapeutics Inc less attractive for value investors when compared to the industry median at 1.83.

You can read more about Dermata Therapeutics Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Metacrine Inc’s Value Grade

Value Grade:

Metacrine, Inc. is a United States-based biotechnology company. The Company is engaged in developing therapeutics for metabolic diseases. The Company leverages approximately two mechanistically distinct programs to target type 2 diabetes, NASH and other metabolic diseases and liver disorders. The Company focuses on advancing research in nuclear hormone receptors for treatment of metabolic diseases.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Metacrine Inc has a Value Score of 76, which is considered to be undervalued.

Metacrine Inc’s price-to-book ratio is higher than its peers. This could make Metacrine Inc less attractive for value investors when compared to the industry median at 1.83.

You can read more about Metacrine Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Polarityte Inc’s Value Grade

Value Grade:

PolarityTE, Inc. is a biotechnology company. The Company is focused on developing regenerative tissue products and biomaterials. It also operates a laboratory testing and clinical research business using equipment, personnel, and facilities it acquired to advance its development of regenerative tissue products. Its first regenerative tissue product is SkinTE, which is intended for the repair, reconstruction, replacement, and supplementation of skin in patients who have a need for treatment of acute or chronic wounds, burns, surgical reconstruction events, scar revision, or removal of dysfunctional skin grafts. The Company's development projects include SkinTE Cryo, SkinTE point-of-care device, PTE 11000, and others.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Polarityte Inc has a Value Score of 65, which is considered to be undervalued.

Polarityte Inc’s price-to-book ratio is higher than its peers. This could make Polarityte Inc less attractive for value investors when compared to the industry median at 1.83.

You can read more about Polarityte Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Biotechnology & Medical Research Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Biotechnology & Medical Research stocks as well as other industrys.

Choosing Which of the 5 Best Biotechnology & Medical Research Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• AEterna Zentaris Inc. (USA) stock has a Value Grade of A.
• Codiak BioSciences Inc stock has a Value Grade of A.
• Dermata Therapeutics Inc stock has a Value Grade of B.
• Metacrine Inc stock has a Value Grade of B.
• Polarityte Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 5 undervalued stocks in the Biotechnology & Medical Research industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Biotechnology & Medical Research Stocks

Want to learn more about Biotechnology & Medical Research stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 5 Undervalued Biotechnology & Medical Research Stocks for Monday, February 06
• Which Is a Better Investment, AbCellera Biologics Inc or FibroGen Inc Stock?
• Which Is a Better Investment, Alkermes Plc or Amicus Therapeutics, Inc. Stock?
• Which Is a Better Investment, Alkermes Plc or FibroGen Inc Stock?

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