Geron Corporation (GERN 2.29%) and Idexx Laboratories (IDXX 0.09%) are both poised to grow and make great long-term healthcare investments, but for different reasons.
Geron, a clinical-stage biopharmaceutical company, is about to bring its first product to market, and it has the potential to be a blockbuster with applications in blood oncology and beyond. Idexx is more established and has grown revenue steadily. Its place in supplying diagnostic equipment and software to veterinarians has a big tailwind as the spending on pet care continues to grow.
Let's see how these two stocks might contribute to the success of an investor's portfolio.
Geron is on the precipice of breaking out
Geron Corporation, a biotech company that focuses on blood disorders, has seen its shares rise more than 193% over the past year. On Jan. 4, the company reported positive phase 3 trial results regarding its lead therapy, imetelstat. The drug, a telomerase inhibitor, has shown promise as a first-in-class therapy for lower-risk myelodysplastic syndromes (MDS) patients. This is a rare group of bone marrow cancers that can lead to acute myeloid leukemia and anemia.
The drug is the first to show a solid safety profile in inhibiting the telomerase enzyme, which is over-expressed in cancers, but not in healthy cells. Geron asserts that telomerase is responsible for the uncontrolled growth of malignant stem cells that can cause blood cancers, so imetelstat's applications extend beyond MDS. The company also has the drug in a phase 3 trial to treat myelofibrosis (MF), another form of bone marrow cancer.
Geron said it thinks the drug could bring in $3 billion annually by 2030, just as a treatment for MDS and MF. The company said it plans a regulatory filing for the drug in the U.S. and Europe this year. It's planning for a launch in the U.S. in the first half of 2024 and in Europe in the latter half of 2024, pending its approvals.
The drug could be a game-changer for Geron as its first marketed drug. In the third quarter, Geron reported nine-month revenue of $493,000, up from $353,000 in the same period last year. It also had a net loss through nine months of $99.3 million, or $0.26 per share, compared to a loss of $84.1 million or $0.26 a share through the first nine months of 2021.
I see Geron as a long-term investment that makes sense to buy now -- before the stock jumps when Imetelstat is approved. However, if you are more risk intolerant, you might want to wait for that news first.
Idexx is the leader of the pet diagnostics pack
When people tighten their belts, one of the last places they cut down on spending is pet care. The amount of money we spend on our furry and feathered friends continues to rise. According to a study by Global Market Insights, pet owners spent $280 billion on their pets last year. That number is expected to have a compound annual growth rate (CAGR) of 7% over the next decade, leading to a $550 billion market by 2033.
Idexx Laboratories, which has 11,000 employees and serves customers in 175 countries, has a dominant place in the pet care diagnostics market. It has grown revenue by 226% since 2019. So it stands to benefit in the coming years as pet spending rises. The company makes products and software for diagnostic testing for veterinary, livestock, and poultry and for water testing. It has four segments: companion animal group (CAG), water, livestock, poultry, and dairy (LPD), and other.
Idexx reported 2022 fourth quarter and full-year earnings on Feb. 6. The company had $3.36 billion in annual revenue, up 5% over last year, led by a 5% rise in CAG diagnostic recurring revenue. While yearly earnings per share (EPS) were $8.03, down 7%, year over year, they were up 8% in the fourth quarter to $2.05.
Idexx's guidance for 2023 shows both revenue and EPS growth, with an estimate of $3.59 billion to $3.69 billion in revenue, showing growth of between 6.5% and 9.5%. This was led again by CAG diagnostics recurring revenue, growing by between 8.5% and 11%. Yearly EPS was forecast as between $9.27 and $9.75, showing a rise of between 16% and 21%.
The company's stock is down more than 5% over the past year, but up more than 19% over the past three months. Considering the company's strong growth potential, its high price-earnings multiple of more than 60 shouldn't be a turnoff for investors. I consider it a definite long-term buy, especially on a day when the price dips.
