Stellar Sales Growth Trend Makes Alnylam Pharmaceuticals Stock A Wise Bet

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We think that Alnylam Pharmaceuticals stock (NASDAQ: ALNY), a pharmaceutical company focused on RNA interference therapeutics for genetically defined diseases, currently is a better pick compared to Haemonetics (NYSE: HAE), best known for its blood and plasma supplies and services, despite ALNY being the more expensive of the two with its P/S ratio of 23x, compared to just 3.0x for HAE. We compare these two companies due to their similar revenue base. Although both the companies saw a rise in revenue over the last twelve months, the growth has been much better for Alnylam.

If we look at stock returns, Alnylam’s 23% growth is far better than -45% returns for Haemonetics over the last twelve months. This compares with 17% growth in the broader S&P 500 index. While both the companies are likely to see continued top-line expansion, Alnylam is expected to outperform. There is more to the comparison, and in the sections below, we discuss why we believe that ALNY stock will offer better returns than HAE stock in the next three years. We compare a slew of factors such as historical revenue growth, returns, and valuation multiple in an interactive dashboard analysis Haemonetics vs. Alnylam Pharmaceuticals, Which Stock Is A Better Bet? Parts of the analysis are summarized below.

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1. Alnylam’s Revenue Growth Has Been Stronger

  • Both companies managed to see sales growth over the last twelve months. Still, Alnylam has witnessed comparatively much faster revenue growth of 71% vs. just 8% for Haemonetics.
  • Looking at a longer time frame, Alnylam’s sales grew at a CAGR of 130% to $0.8 billion over the last twelve months, compared to $0.1 billion in 2018, while Haemonetics’ revenues have declined at a CAGR of -0.9% to $0.9 billion currently.
  • For Alnylam, the revenue growth has been buoyed by market share gains for its three drugs – Onpattro, Givlaari, and Oxlumo. Alnylam’s Onpattro is one of the few currently approved options for treating transthyretin amyloidosis. Onpattro sales stood at $475 million in 2021, while its peak is estimated to be over $2 billion.
  • For Haemonetics, the revenue growth over the recent years has been affected due to the impact of the Covid-19 pandemic on its plasma business. Furthermore, one of the company’s large customers – CSL Pharma – said that it will not renew its contract (which expires in June 2022) with Haemonetics for the use of PCS2 Plasma Collection System devices. CSL alone accounted for over 10% of the company’s total sales, and its loss took a toll on HAE stock price over the last year or so.
  • Our Alnylam Pharmaceuticals Revenue and Haemonestics Revenue dashboards provide more insight into the companies’ sales.
  • Looking forward, Alnylam’s revenue is expected to grow at a faster pace compared to Haemonetics over the next three years. The table below summarizes our revenue expectations for the two companies over the next three years. It points to a CAGR of 22.7% for Alnylam, compared to a 2.3% CAGR for Haemonetics, based on Trefis Machine Learning analysis.
  • Note that we have different methodologies for companies negatively impacted by Covid and for companies not impacted or positively impacted by Covid while forecasting future revenues. For companies negatively affected by Covid, we consider the quarterly revenue recovery trajectory to forecast recovery to the pre-Covid revenue run rate. Beyond the recovery point, we apply the average annual growth observed in the three years before Covid to simulate a return to normal conditions. For companies registering positive revenue growth during Covid, we consider yearly average growth before Covid with a certain weight to growth during Covid and the last twelve months.

Haemonetics Is More Profitable, But It Comes With Higher Risk

  • Alnylam’s operating margin of -67% over the last twelve months is far worse than 4% for Haemonetics.
  • It’s common for pharmaceutical companies to have more expenses at the early stage of the commercialization of their drugs. Much of these expenses go toward R&D, which also explains the sizeable negative figure for Alnylam’s operating margin.
  • Our Alnylam Pharmaceuticals Operating Income and Haemonetics Operating Income dashboards have more details.
  • Haemonetics’ free cash flow margin of 11% is much higher than -76% for Alnylam.
  • Looking at financial risk, Haemonetics’ 27% debt as a percentage of equity is higher than <1% for Alnylam, while its 13% cash as a percentage of assets is lower than 65% for the latter, implying that Alnylam has a better debt position and cash cushion.

3. The Net of It All

  • We see that Alnylam has demonstrated better revenue growth, and it offers lower financial risk. However, Haemonetics is more profitable, and it is available at a relatively lower valuation.
  • Now, looking at prospects, using P/S as a base, due to high fluctuations in P/E and P/EBIT, we believe Alnylam is currently the better choice of the two.
  • The table below summarizes our revenue and return expectation for Alnylam and Haemonetics over the next three years and points to an expected return of 85% for ALNY over this period vs. 19% expected return for HAE stock, implying that investors are better off buying ALNY over HAE, despite its high valuation, based on Trefis Machine Learning analysis – Haemonetics vs. Alnylam Pharmaceuticals – which also provides more details on how we arrive at these numbers.

While ALNY stock may outperform HAE, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Medtronic vs. Moscow,

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.

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