ALKERMES PLC (NASDAQ:ALKS) – A Potential Undervalued Opportunity in Biopharma

ALKERMES PLC (NASDAQ:ALKS) was identified by our Decent Value stock screener as a company with strong fundamentals trading at an attractive valuation. The biopharmaceutical firm specializes in treatments for neurological disorders and addiction, with a portfolio of commercial products and a promising pipeline.

Valuation

ALKS stands out with a Valuation Rating of 7/10, indicating it trades at a discount compared to peers:

• P/E ratio of 10.53 – significantly below the industry average of 76.66 and the S&P 500’s 27.45.
• Price/Free Cash Flow and Enterprise Value/EBITDA ratios are cheaper than 96% of biotech competitors.
• Forward P/E of 15.61 remains below industry and broader market averages.

Financial Health

The company earns a Health Rating of 8/10, reflecting a strong balance sheet:

• No outstanding debt, eliminating leverage risk.
• Altman-Z score of 6.31 suggests low bankruptcy risk, better than 80% of peers.
• Current Ratio of 3.33 and Quick Ratio of 2.92 indicate ample liquidity.

Profitability

With a Profitability Rating of 7/10, ALKS delivers industry-leading margins:

• Operating Margin of 25.9% (top 3% of biotech firms).
• Return on Equity (23.28%) and Return on Invested Capital (20.05%) rank in the top 4% of the sector.
• Gross Margin of 84.42% reflects pricing power and cost efficiency.

Growth Considerations

While growth is more moderate (Rating: 4/10), key strengths include:

• EPS grew 48.8% YoY, with a 5-year annualized growth rate of 32.5%.
• Revenue growth has slowed recently, but the pipeline (including neurological disorder treatments) could drive future expansion.

For a deeper dive, review the full ALKS fundamental report.

Our Decent Value screener lists more stocks with strong fundamentals trading at reasonable valuations.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should conduct your own analysis before making investment decisions.