Inhalers breathe new life into Amphastar

We want to introduce a promising new recommendation we spotted in the biotech industry, suggests Marc Skousen in its premium consulting service, fast money trader.

Our final recommendation is a biotech stock that is showing very strong earnings and price movement. These are attractive advantages in the biotech industry, where companies generally need substantial investment to become profitable.

Our new recommendation is Amphastar Pharmaceuticals (AMPH), a Rancho Cucamonga, California-based biopharmaceutical company primarily focused on the development, manufacturing, marketing and sale of technically challenging generic and proprietary injectable, inhalation and intranasal products. Additionally, the Company sells insulin API products.

The Company’s finished products are used in hospitals or urgent care clinics. Products are also contracted and distributed through group purchasing organizations and drug wholesalers. It has two reportable segments: finished pharmaceutical products and API products. Geographically, the company’s commercial presence is felt in the United States, China and France. The United States accounts for the majority of these revenues.

Amphastar announced on March 10 that its net income for the fourth quarter of 2021 reached $120.9 million, up 26% from the same quarter a year ago, its net income according to generally accounted accounting principles (GAAP) to $19.8 million, or 39 cents per unit, from a loss of $6.3 million, in the fourth quarter of 2020.

Adjusted non-GAAP net income for the fourth quarter of 2021 reached $20.8 million, or $0.42 per share, up 160.6% from $7,994 in the same quarter of 2020.

On March 10, AMPH released its fourth quarter numbers, which easily beat estimates on the revenue and profit fronts. In fact, earnings per share (EPS) growth in the quarter was an outstanding 163% year over year. It’s the kind of recent growth that has propelled AMPH into the top 3% in terms of EPS growth relative to the rest of the market.

On the price front, AMPH shares are up about 48% year-to-date, a move we think is both impressive and not yet complete. The big move over the past 52 weeks by around 90% has placed AMPH in the top 1% of performing artists on a relative strength basis. Interestingly, Piper Sandler just raised her target on the stock to $35.00, but AMPH has already come this far.

Given the specialization and niche market (its best-known drug is Primatene Mist for asthmatics) and its delivery method (inhalation), we believe that greater growth than what we have seen recently is in progress. So, let’s “inhale” this stock into our portfolio right now. Buy with a protective stop set at $27.60.

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