Dj Incyte Corp. Stock Outperforms Competitors Despite Losses On The Day

Looking for broad exposure to the Small Cap Growth segment of the US equity market? You should consider the Janus Henderson Small/Mid Cap Growth Alpha ETF (JSMD), a passively managed exchange traded fund launched on 02/23/2016.

The fund is sponsored by Janus Henderson. It has amassed assets over $386.30 million, making it one of the average sized ETFs attempting to match the Small Cap Growth segment of the US equity market.

Why Small Cap Growth

There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.

Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Also, growth stocks are a type of equity that carries more risk compared to others. Compared to value stocks, growth stocks are a safer bet in a strong bull market, but don't perform as strongly in almost all other financial environments.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.30%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.36%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Industrials sector--about 26.70% of the portfolio. Healthcare and Information Technology round out the top three.

Looking at individual holdings, Applovin Corp. Class A (APP) accounts for about 4.39% of total assets, followed by Heico Corporation (HEI) and Incyte Corporation (INCY).

The top 10 holdings account for about 24.75% of total assets under management.

Performance and Risk

JSMD seeks to match the performance of the Janus Small/Mid Cap Growth Alpha Index before fees and expenses. The Janus Henderson Small/Mid Cap Growth Alpha Index selects small- and medium-sized capitalization stocks that are poised for smart growth by evaluating each company performance in three critical areas: growth, profitability, and capital efficiency.

The ETF has added roughly 10.44% so far this year and was up about 26.29% in the last one year (as of 11/05/2024). In the past 52-week period, it has traded between $55.58 and $73.80.

The ETF has a beta of 1.12 and standard deviation of 23.42% for the trailing three-year period. With about 258 holdings, it effectively diversifies company-specific risk.

Alternatives

Janus Henderson Small/Mid Cap Growth Alpha ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, JSMD is a reasonable option for those seeking exposure to the Style Box - Small Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Russell 2000 Growth ETF (IWO) and the Vanguard Small-Cap Growth ETF (VBK) track a similar index. While iShares Russell 2000 Growth ETF has $12.09 billion in assets, Vanguard Small-Cap Growth ETF has $18.21 billion. IWO has an expense ratio of 0.24% and VBK charges 0.07%.

Bottom-Line

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

Zacks Investment Research

Investors interested in stocks from the Medical - Biomedical and Genetics sector have probably already heard of BioMarin Pharmaceutical (BMRN) and Incyte (INCY). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, BioMarin Pharmaceutical has a Zacks Rank of #2 (Buy), while Incyte has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BMRN is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

BMRN currently has a forward P/E ratio of 20.37, while INCY has a forward P/E of 54.33. We also note that BMRN has a PEG ratio of 0.50. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. INCY currently has a PEG ratio of 2.48.

Another notable valuation metric for BMRN is its P/B ratio of 2.34. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, INCY has a P/B of 4.62.

These metrics, and several others, help BMRN earn a Value grade of B, while INCY has been given a Value grade of C.

BMRN stands above INCY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BMRN is the superior value option right now.

Zacks Investment Research

On Tuesday, Incyte Corporation reported third-quarter revenue of $1.14 billion, up 24% year over year, beating the consensus of $1.08 billion.

Jakafi (ruxolitinib) net product revenues increased to $741.18 million, up 16% year over year, primarily due to a 10% increase in total demand.

Guidance: Incyte forecasts 2024 Jakafi revenue of $2.74 billion—$2.77 billion, up from prior guidance of $2.71 billion—$2.75 billion.

BofA Securities analyst upgraded Incyte’s stock, citing strong demand for Jakafi liſts overhang on competitive pressure in myelofibrosis and sees multiple shots on goal from the pipeline with several pivotal readouts expected in 2025.

The analyst upgraded from Neutral to Buy with a price target of 90, up from $68.

“We are also encouraged by continued growth for Opzelura with potential to expand into pediatric AD (approval expected in 2H25). We note 2025 will be a catalyst-rich year with several pivotal readouts,” the analyst added.

Although clinical validation is still necessary, the BofA analyst writes that some of these programs may help offset the anticipated loss of exclusivity for Jakafi in 2028.

The analyst has a more optimistic view of Jakafi’s prospects in myelofibrosis, seeing a reduced risk of market share erosion from new competitors.

The updated model projects Jakafi’s peak sales at $3.2 billion, up from our previous estimate of $2.8 billion. The analyst has also raised estimates for Opzelura, anticipating strong growth driven by the pediatric atopic dermatitis market and robust demand in the EU, now projecting peak sales of $1.7 billion.

Price Action: INCY stock closed higher by 0.45% to $73.93 on Wednesday.

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