Since September 2024, BioMarin Pharmaceutical has been in a holding pattern, floating around $70.24.

Is now the time to buy BMRN? Or does the price properly account for its business quality and fundamentals? Find out in our full research report, it’s free.

Why Does BMRN Stock Spark Debate?

Pioneering treatments for conditions that often had no previous therapeutic options, BioMarin Pharmaceutical (NASDAQ:BMRN) develops and commercializes therapies that address the root causes of rare genetic disorders, particularly those affecting children.

Two Positive Attributes:

1. Long-Term Revenue Growth Shows Momentum

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, BioMarin Pharmaceutical grew its sales at a decent 10.9% compounded annual growth rate. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.

2. Increasing Free Cash Flow Margin Juices Financials

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

As you can see below, BioMarin Pharmaceutical’s margin expanded by 18.6 percentage points over the last five years. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability. BioMarin Pharmaceutical’s free cash flow margin for the trailing 12 months was 17.1%.

One Reason to be Careful:

Previous Growth Initiatives Haven’t Impressed

Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although BioMarin Pharmaceutical has shown solid business quality lately, it historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 1.2%, lower than the typical cost of capital (how much it costs to raise money) for healthcare companies.

Final Judgment

BioMarin Pharmaceutical’s positive characteristics outweigh the negatives, but at $70.24 per share (or 17.8× forward price-to-earnings), is now the right time to buy the stock? See for yourself in our in-depth research report, it’s free.

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