Vibrant Global Expansion And Innovative Therapies Set The Stage For Dynamic Growth

Key Takeaways

• BioMarin's strategic focus on new business units and geographic expansion is expected to enhance market penetration and revenue growth.
  
• Cost transformation initiatives aim to boost operating margins and profitability in tandem with expected robust revenue growth.
  
• BioMarin's future growth faces risks from competitive pressures, market fluctuations, and restructuring challenges, impacting revenue, margins, and investor confidence.

Catalysts

Engages in the development and commercialization of therapies for people with serious and life-threatening rare diseases and medical conditions.

• BioMarin is focusing on new business units for skeletal conditions, enzyme therapies, and ROCTAVIAN, which is expected to drive stronger revenue growth and improve efficiency through increased market penetration and new patient starts, ultimately enhancing revenue and efficiency.
  
• The significant revenue growth seen in VOXZOGO, driven by increased penetration in new geographies and expanded indications, is anticipated to continue as the company leverages its global market capabilities. This will likely enhance revenue growth prospects.
  
• BioMarin plans to prioritize and accelerate BMN 333, a long-acting CNP therapy, which could provide enhanced therapeutic options in skeletal conditions and result in a large revenue opportunity, bolstering future revenue streams.
  
• Anticipated geographical expansion of VOXZOGO into more than 20 additional markets by 2027, targeting segments outside the U.S., will likely contribute significantly to revenue growth and diversification of revenue streams.
  
• The continued execution of BioMarin's cost transformation program alongside expected robust revenue growth is designed to drive substantial expansion of operating margins and earnings, reflecting improved profitability.

BioMarin Pharmaceutical Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming BioMarin Pharmaceutical's revenue will grow by 8.7% annually over the next 3 years.
• Analysts assume that profit margins will increase from 11.7% today to 25.6% in 3 years time.
• Analysts expect earnings to reach $905.2 million (and earnings per share of $4.48) by about November 2027, up from $322.3 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $1.2 billion in earnings, and the most bearish expecting $447.2 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 26.2x on those 2027 earnings, down from 39.4x today. This future PE is greater than the current PE for the US Biotechs industry at 15.0x.
• Analysts expect the number of shares outstanding to grow by 1.94% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.2%, as per the Simply Wall St company report.

BioMarin Pharmaceutical Future Earnings Per Share Growth

Risks

• BioMarin's product development and commercialization depend on the progress of product programs, regulatory actions, and competitive developments, posing risks to future revenue growth.
  
• The company's finances and future earnings may be negatively impacted by fluctuations in market conditions and product demand, which could lead to uncertainties in achieving revenue and profitability targets.
  
• Execution risks related to the corporate restructuring and transformational initiatives could affect operational efficacy and profitability, posing a challenge to net margins.
  
• Competition in the achondroplasia market and others may intensify, potentially threatening BioMarin's revenue streams from key products like VOXZOGO.
  
• Variability in quarterly performance due to external factors like order timing impacts revenue predictability and could affect long-term investor confidence, impacting earnings projections.

Valuation

• The analysts have a consensus price target of $98.52 for BioMarin Pharmaceutical based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $127.0, and the most bearish reporting a price target of just $65.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2027, revenues will be $3.5 billion, earnings will come to $905.2 million, and it would be trading on a PE ratio of 26.2x, assuming you use a discount rate of 6.2%.
  
• Given the current share price of $66.66, the analyst's price target of $98.52 is 32.3% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.