BIOMARIN PHARMACEUTICAL INC (NASDAQ:BMRN) – An Undervalued Biotech Stock Worth Watching

BIOMARIN PHARMACEUTICAL INC (NASDAQ:BMRN) was identified by our stock screener as a potential value opportunity. The company, which focuses on rare disease therapies, shows strong profitability and financial health while trading at a reasonable valuation. Let’s examine why BMRN stands out.

Valuation: Attractively Priced

BMRN’s valuation metrics suggest it may be undervalued compared to industry peers:

• Price/Earnings (P/E) Ratio: At 21.03, BMRN trades cheaper than 95% of biotech firms, despite solid fundamentals.
• Forward P/E: 12.76, well below the industry average of 57.09.
• Enterprise Value/EBITDA: Also favorable, with 95.9% of peers trading at higher multiples.

The stock’s PEG ratio, which accounts for growth, further supports its appeal as reasonably priced.

Profitability: Strong Margins

BMRN’s profitability metrics are impressive:

• Operating Margin: 24.1%, outperforming 96.4% of the biotech sector.
• Gross Margin: 79.4%, among the highest in the industry.
• Return on Invested Capital (ROIC): 9.2%, showing efficient capital use.

Recent earnings growth (136.8% YoY EPS increase) adds to the bullish case.

Financial Health: Low Risk

The company maintains a solid balance sheet:

• Debt/Equity Ratio: Just 0.10, indicating minimal leverage.
• Current Ratio: 5.52, ensuring ample liquidity.
• Altman-Z Score: 6.04, well above bankruptcy risk levels.

While share dilution has occurred, strong free cash flow coverage of debt mitigates concerns.

Growth: Steady Expansion

BMRN’s growth outlook remains positive:

• Revenue Growth: 19.4% YoY, with a 10.9% 5-year CAGR.
• Future EPS Growth: Expected to rise nearly 28% annually.

Though revenue growth may slow slightly, earnings momentum remains intact.

Our Decent Value Stocks screener lists more stocks with similar characteristics. For a deeper look, review the full fundamental report on BMRN.

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.