One has an escaped drug, and the other has a nice, wide moat.
Idexx Laboratories (IDXX 1.98%) and Geron Corporation (GERN -9.97%) are both poised to expand and represent excellent long-term healthcare investments, but for various factors.
A biopharmaceutical company called Geron is about to release its first product, which has the potential to be a blockbuster with uses in blood oncology and other areas. Idexx has been around longer and has steadily grown its income. As spending on pet care keeps going up, its place as a provider of diagnostic equipment and software to veterinarians is getting a big boost.
Let’s look at how these two stocks might help an investor’s portfolio do well.
Geron is almost ready to break out.
Over the past year, shares of the blood disorder-focused biotech company Geron Corporation have gone up by more than 193%. On January 4, the company said that its lead therapy, imetelstat, did well in phase 3 trials. The telomerase inhibitor drug has shown promise as a first-in-class treatment for people with myelodysplastic syndromes (MDS) who are at lower risk. This is a group of rare cancers that start in the bone marrow and can cause acute myeloid leukemia and anemia.
The drug is the first to show that blocking the telomerase enzyme, which is overactive in cancer cells but not in healthy cells, is safe. Geron says that the unchecked growth of cancerous stem cells, which can lead to blood cancers, is caused by telomerase. Since imetelstat can be used for more than just MDS, this means that it has a wider range of uses. The company is also testing the drug to treat myelofibrosis (MF), which is another type of bone marrow cancer, in a phase 3 trial.
Geron said it thinks the drug could bring in $3 billion a year by 2030, just as a treatment for MDS and MF. The company said that it wants to submit paperwork for the drug to regulators in the U.S. and Europe this year. It plans to launch in the U.S. in the first half of 2024 and in Europe in the second half of that year if it gets the necessary permissions.
As Geron’s first drug to go on the market, the drug could be a big deal. Geron’s revenue for the first nine months of the year was $493,000. This is up from $353,000 during the same time last year. It also lost $99.3 million, or $0.26 per share, in the first nine months, compared to $84.1 million, or $0.26 per share, in the first nine months of 2021.
I think Geron is a good long-term investment that makes sense to buy now before the stock goes up when Imetelstat is approved. But if you don’t like taking risks, you might want to wait until you hear that news first.
The pet diagnostics pack is led by Idexx.
When people try to save money, one of the last things they cut back on is taking care of their pets. We keep spending more and more money on our furry and feathered friends. Global Market Insights did a study and found that pet owners spent $280 billion on their pets last year. Over the next ten years, that number is expected to grow by 7% per year, making the market worth $550 billion by 2033.
Idexx Laboratories is the leader in the pet care diagnostics market. It has 11,000 employees and serves clients in 175 countries. Since 2019, sales have grown by 226%. So it stands to gain as pet spending goes up in the coming years. The company makes diagnostic testing tools and software for veterinary, livestock, and poultry use, as well as for testing water. It is divided into four parts: companion animal group (CAG), water, livestock, poultry, dairy (LPD), and others.
Idexx reported earnings for the fourth quarter and the whole year of 2022 on February 6. The company’s annual revenue was $3.36 billion, which was up 5% from the year before. This increase was driven by a 5% rise in CAG diagnostic recurring revenue. Earnings per share (EPS) for the year were $8.03, which was 7% less than the same time last year. However, they went up by 8% in the fourth quarter to $2.05.
Idexx’s plan for 2023 shows that both revenue and earnings per share will grow. Revenue is expected to grow by between 6.5% and 9.5%, from $3.59 billion to $3.69 billion. This was again led by recurring revenue from CAG diagnostics, which grew by between 8.5% and 11%. The expected EPS for the year was between $9.27 and $9.75, which would be an increase of 16% to 21%.
Over the past year, the company’s stock has gone down more than 5%, but over the past three months, it has gone up more than 19%. Investors shouldn’t be scared off by the high price-earnings multiple of more than 60 because the company has a good chance of growing. I think it’s a good long-term buy, especially when the price goes down.