Biomarin Pharmaceutical Inc At Ubs Global Healthcare Conference

Investors in BioMarin Pharmaceutical Inc. BMRN need to pay close attention to the stock based on moves in the options market lately. That is because the Jan 17, 2025 $40.00 Call had some of the highest implied volatility of all equity options today.

What is Implied Volatility?

Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.

What do the Analysts Think?

Clearly, options traders are pricing in a big move for BioMarin Pharmaceutical shares, but what is the fundamental picture for the company? Currently, BioMarin Pharmaceutical is a Zacks Rank #3 (Hold) in the Medical- Biomedical and Genetics industry that ranks in the Top 31% of our Zacks Industry Rank. Over the last 60 days, no analyst has increased his estimate for the current quarter, while eight have revised their estimate downward. Our Zacks Consensus Estimate for the current quarter has moved from 82 cents per share to 73 cents in the same time period.

Given the way analysts feel about BioMarin Pharmaceutical right now, this huge implied volatility could mean there’s a trade developing. Often times, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.

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Zacks Investment Research

In October, CAMP4 Therapeutics Corporation C priced its initial public offering of 6.82 million at $11.00 per share, with approximately $75 million in gross proceeds.

Camp4 is an RNA therapeutics company focused on developing therapies for rare diseases.

CAMP4 Therapeutics dosed the first participant in its Phase 1 study of CMP-CPS-001 for urea cycle disorders (UCDs) in March.

CMP-CPS-001 has secured FDA Orphan Drug and Rare Pediatric Disease Designations for urea cycle disorders.

Last month, the company announced a new research collaboration with BioMarin Pharmaceutical Inc to advance novel therapeutics that increase protein levels by targeting regulatory RNA (regRNA) sequences, key elements controlling gene expression.

Under the terms of the agreement, BioMarin has the right to select two targets identified by CAMP4's RAP Platform to advance into clinical development.

William Blair initiated coverage on CAMP4 Therapeutics, noting that Camp4’s shares trade at a significantly lower market cap than other early-stage genetic medicine companies, even though it has the innovative RAP platform. This unique platform offers a novel approach to enhancing target gene expression for rare diseases.

Piper Sandler initiated coverage on CAMP4 Therapeutics, noting that regRNAs could be the next big RNA modality with advantages over protein replacement or gene therapy.

The Piper analyst writes that any increase in ureagenesis rate test (URT) would be a signal of on-target CMP-CPS-001 ammonia lowering and provide proof-of-concept for urea cycle disorders patients.

The analyst expects CAMP4 to conduct registrational Phase 2 studies in urea cycle disorders patients and could gain FDA approval in 2029 with peak CMP-CPS-001 revenues of $1.0 billion by 2036.

Piper has initiated coverage of CAMP4 with an Overweight rating and a price target of $18.

Price Action: CAMP stock is up 13.5% at $9.33 at last check Tuesday.

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Taking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both.

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Value Score

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Growth Score

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Momentum Score

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VGM Score

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How Style Scores Work with the Zacks Rank

The Zacks Rank is a proprietary stock-rating model that harnesses the power of earnings estimate revisions, or changes to a company's earnings expectations, to help investors build a successful portfolio.

#1 (Strong Buy) stocks have produced an unmatched +25.41% average annual return since 1988, which is more than double the S&P 500's performance over the same time frame. However, the Zacks Rank examines a ton of stocks, and there can be more than 200 companies with a Strong Buy rank, and another 600 with a #2 (Buy) rank, on any given day.

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Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.

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Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: BioMarin Pharmaceutical (BMRN)

San Rafael, CA-based BioMarin Pharmaceutical Inc. focuses on the development and commercialization of treatments for life-threatening severe medical conditions, mainly for children.

BMRN is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.

It also boasts a Value Style Score of B thanks to attractive valuation metrics like a forward P/E ratio of 20.18; value investors should take notice.

Eight analysts revised their earnings estimate higher in the last 60 days for fiscal 2024, while the Zacks Consensus Estimate has increased $0.01 to $3.27 per share. BMRN also boasts an average earnings surprise of 28.7%.

With a solid Zacks Rank and top-tier Value and VGM Style Scores, BMRN should be on investors' short list.

Zacks Investment Research

Growth investors focus on stocks that are seeing above-average financial growth, as this feature helps these securities garner the market's attention and deliver solid returns. But finding a great growth stock is not easy at all.

By their very nature, these stocks carry above-average risk and volatility. Moreover, if a company's growth story is over or nearing its end, betting on it could lead to significant loss.

However, the task of finding cutting-edge growth stocks is made easy with the help of the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects.

Our proprietary system currently recommends BioMarin Pharmaceutical (BMRN) as one such stock. This company not only has a favorable Growth Score, but also carries a top Zacks Rank.

Research shows that stocks carrying the best growth features consistently beat the market. And for stocks that have a combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy), returns are even better.

Here are three of the most important factors that make the stock of this rare disease biopharmaceutical a great growth pick right now.

Earnings Growth

Arguably nothing is more important than earnings growth, as surging profit levels is what most investors are after. And for growth investors, double-digit earnings growth is definitely preferable, and often an indication of strong prospects (and stock price gains) for the company under consideration.

While the historical EPS growth rate for BioMarin is 36.8%, investors should actually focus on the projected growth. The company's EPS is expected to grow 57.2% this year, crushing the industry average, which calls for EPS growth of 21.4%.

Cash Flow Growth

Cash is the lifeblood of any business, but higher-than-average cash flow growth is more beneficial and important for growth-oriented companies than for mature companies. That's because, high cash accumulation enables these companies to undertake new projects without raising expensive outside funds.

Right now, year-over-year cash flow growth for BioMarin is 23.3%, which is higher than many of its peers. In fact, the rate compares to the industry average of -2.6%.

While investors should actually consider the current cash flow growth, it's worth taking a look at the historical rate too for putting the current reading into proper perspective. The company's annualized cash flow growth rate has been 54.6% over the past 3-5 years versus the industry average of 3.3%.

Promising Earnings Estimate Revisions

Superiority of a stock in terms of the metrics outlined above can be further validated by looking at the trend in earnings estimate revisions. A positive trend is of course favorable here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

The current-year earnings estimates for BioMarin have been revising upward. The Zacks Consensus Estimate for the current year has surged 3.2% over the past month.

Bottom Line

While the overall earnings estimate revisions have made BioMarin a Zacks Rank #2 stock, it has earned itself a Growth Score of A based on a number of factors, including the ones discussed above.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

This combination positions BioMarin well for outperformance, so growth investors may want to bet on it.

Zacks Investment Research