A Hidden Gem in the Biotech Sector: Halozyme Therapeutics (HALO)

Let’s talk about a rather interesting biotech stock — Halozyme Therapeutics (NASDAQ: HALO). 

This is far from the typical “promising startup” that you often see in the industry — founded back in 1998, the company maintains a robust offering (and pipeline) of oncology therapies.

Before moving on, we have to deal with the elephant in the room — according to WallStreetZen’s Industry Ratings, the Biotech Industry currently has the lowest possible rating, an F.

However, I strongly believe this stock is worth a closer look. Here’s why. 

For one, consider that biotech stocks are a dime a dozen — our system currently tracks a whopping 463 of them. Among those hundreds of stocks, HALO is a standout — it’s the 6th highest rated in the industry, putting it in “cream of the crop” territory.

Moreover, Halozyme Therapeutics stock carries an overall Zen Rating of A. Per an analysis of 115 proprietary factors that correlate with outsized returns, HALO shares rank in the top 2% of equities — and that’s not in the biotech sector, that’s on the whole.

To get a sense of why this stock is worth considering, as opposed to the vast majority of equities in its industry, we have to move on to specifics. Each Zen Rating is a composite score of 7 Component Grade ratings — and HALO shares score highly in 4 categories.

First, let’s discuss Value. At present, HALO shares have a price-to-earnings (P/E) ratio of 16.8x — which is far more attractive than the market-wide average of 28.01x. 

However, a relatively cheap valuation means little if there’s little in the way of growth prospects — but that doesn’t happen to be the case here. Halozyme Therapeutics stock currently has a price-to-earnings growth (PEG) ratio of 0.59x, indicating that it is severely undervalued relative to expected earnings. The stock ranks in the top 5% according to its Value Component Grade rating.

Now let’s examine the stock’s Financials Component Grade rating. Last year, the biotech business saw a pretty significant increase in profitability, as margins expanded from an already decent 34% to 43.7%. In addition, Halozyme maintains a hefty war chest with $1.09 billion in short-term assets — far exceeding its short-term liabilities of $139.1 million. This is the company’s forte — Halozyme Therapeutics ranks in the top 1% of stocks in terms of Financials.

The stock also ranks highly in terms of Sentiment and Artificial Intelligence. The former is owed to the fact that the biotech business has consistently provided earnings per share (EPS) beats since Q3 2022. Well, to be more precise, since then, the company delivered EPS in line with estimates only once, during Q4 2023, so all in all, nine earnings beats in the last ten quarters. In terms of Sentiment, HALO stock ranks in the 80th percentile.

Lastly, Halozyme Therapeutics shares rank in the top 14% according to Artificial Intelligence. This component grade rating is based on the findings of a neural network trained on more than 20 years of fundamental and technical data.

In addition, there are several tailwinds currently at play. In April alone, the company received regulatory approval for three treatments, covering neuropathy, bone cancer, and small cell lung cancer, from the European Commission and the Food and Drug Administration (FDA).

If the stock has piqued your interest, keep an eye out for its next earnings call, which is expected on May 13.

—> Click here to research HALO

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