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 Thursday, July 20, 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.

Ironwood Pharmaceuticals, Inc.’s Value Grade

Value Grade:

Ironwood Pharmaceuticals, Inc. is a gastrointestinal (GI) healthcare company, which is advancing the treatment of GI diseases and redefining the standard of care for GI patients. It develops and commercializes GI product opportunities in areas of significant unmet need, leveraging its demonstrated expertise and capabilities in GI diseases. LINZESS (linaclotide), its commercial product, in a class of GI medicines called guanylate cyclase type C agonists (GC-C agonists) and is indicated for adult men and women suffering from irritable bowel syndrome with constipation (IBS-C), or chronic idiopathic constipation (CIC). LINZESS is available to adult men and women suffering from IBS-C or CIC in the United States and Mexico, IBS-C or chronic constipation in Japan, and IBS-C in China. Linaclotide is available under the trademarked name CONSTELLA to adult men and women suffering from IBS-C or CIC in Canada, and to adult men and women suffering from IBS-C in certain European countries.

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.

Ironwood Pharmaceuticals, Inc. has a Value Score of 66, which is considered to be undervalued.

When you look at Ironwood Pharmaceuticals, Inc.’s price-to-sales ratio at 3.88 compared to the industry median at 8.96, this company has a lower price relative to revenue compared to its peers. This could make Ironwood Pharmaceuticals, Inc.’s stock more attractive for value investors.

Ironwood Pharmaceuticals, Inc.’s price-earnings ratio is 10.42 compared to the industry median at 11.69. This means it has a lower share price relative to earnings compared to its peers. This could make Ironwood Pharmaceuticals, Inc. more attractive for value investors.

Now, let’s assess Ironwood Pharmaceuticals, Inc.’s EV/EBITDA ratio, also known as enterprise multiple. At 5.0, when compared to the industry median of 0.6, 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. Ironwood Pharmaceuticals, Inc.’s shareholder yield is higher than its industry median ratio of (6.01%). 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. Ironwood Pharmaceuticals, Inc.’s price-to-book ratio is higher than its industry median ratio of 1.76. This could make Ironwood Pharmaceuticals, Inc. less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Ironwood Pharmaceuticals, Inc.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Ironwood Pharmaceuticals, Inc.’s price-to-free-cash-flow ratio is lower than its industry median ratio of 23.81. This could make Ironwood Pharmaceuticals, Inc. more attractive because the lower P/FCF ratio indicates that Ironwood Pharmaceuticals, Inc. is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

NovaBay Pharmaceuticals Inc’s Value Grade

Value Grade:

NovaBay Pharmaceuticals, Inc. is a pharmaceutical company. The Company develops and sells scientifically created and clinically proven eyecare and skincare products. Its product, Avenova Antimicrobial Lid & Lash Solution is used for blepharitis and dry-eye disease and is also available directly to eyecare consumers through online distribution. Its trademarks include Avenova, CelleRx, PhaseOne, NeutroPhase, DERMAdoctor, Kakadu C, AINT Misbehavin, KP Duty, and depictions of Dr. Audrey Kunin. Avenova Spray has broad antimicrobial properties as it removes foreign material including microorganisms and debris from the skin around the eye, including the eyelid. The Company, through its subsidiary DERMAdoctor, LLC, offers approximately 30 dermatologist-developed products targeting common skin concerns, ranging from aging and blemishes to dry skin, perspiration, and keratosis pilaris.

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.

NovaBay Pharmaceuticals Inc has a Value Score of 78, which is considered to be undervalued.

NovaBay Pharmaceuticals Inc’s price-to-book ratio is higher than its peers. This could make NovaBay Pharmaceuticals Inc less attractive for value investors when compared to the industry median at 1.76.

You can read more about NovaBay Pharmaceuticals 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.

Inotiv Inc’s Value Grade

Value Grade:

Inotiv, Inc. is an international contract research company that is providing nonclinical and analytical drug discovery and development services to the pharmaceutical and medical device industries and selling a range of research-quality animals and diets to the same industries as well as academia and government clients. Its products and services focus on bringing new drugs and medical devices through the discovery and preclinical phases of development. It operates through two segments: Discovery and Safety Assessment (DSA) and Research Models and Services (RMS). Its DSA segment supports the discovery, nonclinical development, and clinical development needs of researchers and clinicians for primarily small molecule drug candidates, as well as biotherapeutics and biomedical devices. Its RMS segment offers access to a range of small and large research models for basic research and drug discovery and development, as well as specialized models for specific diseases and therapeutic areas.

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.

Inotiv Inc has a Value Score of 82, which is considered to be undervalued.

Inotiv Inc’s price-to-book ratio is higher than its peers. This could make Inotiv Inc less attractive for value investors when compared to the industry median at 1.76.

You can read more about Inotiv 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.

Biomx Inc’s Value Grade

Value Grade:

BiomX Inc., formerly Chardan Healthcare Acquisition Corp., is a microbiome company. The Company is focused on developing both natural and engineered phage therapies. It develops therapies to target and destroy bacteria that affect the appearance of skin, as well as harmful bacteria in chronic diseases, such as inflammatory bowel disease (IBD), primary sclerosing cholangitis (PSC) and cancer. The Company discovers and validates bacterial targets and customizes phage compositions against the targets. Its pipeline includes BX001, BX002 and BX003. BX001 is a product candidate that improves the appearance of acne-prone skin. BX002 is a customized phage cocktail that eradicates bacterial targets associated with the onset of IBD. BX003 is a customized phage cocktail developed against specific strains of Klebsiella pneumoniae (Kp).

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.

Biomx Inc has a Value Score of 74, which is considered to be undervalued.

Biomx Inc’s price-to-book ratio is higher than its peers. This could make Biomx Inc less attractive for value investors when compared to the industry median at 1.76.

You can read more about Biomx 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.

Salarius Pharmaceuticals Inc’s Value Grade

Value Grade:

Salarius Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company. The Company is focused on developing effective treatments for cancers with unmet medical needs. It is developing treatments for cancers caused by dysregulated gene expression. The Company?s product portfolio includes seclidemstat, which is being studied as a potential treatment for pediatric cancers, sarcomas and other cancers with limited treatment options. The Company's pipeline consists of two primary compounds: SP-3164, a small-molecule protein degrader, and seclidemstat (SP-2577), a small-molecule inhibitor. SP-3164 is a next-generation cereblon-binding molecular glue (MG). SP-2577 is a small-molecule LSD1 inhibitor with a novel scaffold. The molecule was discovered using structure-based computational screening coupled with chemical screening.

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.

Salarius Pharmaceuticals Inc has a Value Score of 78, which is considered to be undervalued.

Salarius Pharmaceuticals Inc’s price-to-book ratio is higher than its peers. This could make Salarius Pharmaceuticals Inc less attractive for value investors when compared to the industry median at 1.76.

You can read more about Salarius Pharmaceuticals 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.

• Ironwood Pharmaceuticals, Inc. stock has a Value Grade of B.
• NovaBay Pharmaceuticals Inc stock has a Value Grade of B.
• Inotiv Inc stock has a Value Grade of A.
• Biomx Inc stock has a Value Grade of B.
• Salarius Pharmaceuticals 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 Thursday, July 20
• 6 Undervalued Biotechnology & Medical Research Stocks for Wednesday, July 19
• Why AbCellera Biologics Inc’s (ABCL) Stock Is Up 5.16%
• Why argenx SE - ADR’s (ARGX) Stock Is Up 4.34%

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