Biotech stocks recently experienced their best week since the start of 2017. The biotechnology sector spiked following news that President Donald Trump plans to address drug prices with an executive order rather than strict regulatory control. While there is uncertainty ahead, we believe that the rally in biotech stocks has a long way left to run.
We set out to find five biotech stocks that make a compelling investing opportunity. Because of the risks involved with biotech stocks, we carefully picked securities with only a “strong buy” consensus rating from the Street.
This is based on all the ratings the stock has received in the previous three months.
So let’s dive in and take a closer look at Wall Street’s five favorite biotech stocks right now!
Biotech Stocks to Buy: BioMarin (BMRN)
BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), a biotech which specializes in treating rare genetic diseases. BMRN has just announced a positive mid-study update for its new gene therapy treatment.
According to BMRN, this highly anticipated therapy can revolutionize severe hemophilia A treatment. BMRN wants to eliminate bleeding and reduce the number of factor VIII infusions to close to zero. The plan is now to launch a Phase 3 study in the fourth quarter.
BMRN stock has a bullish outlook from the Street with a “strong buy” consensus. The stock received seven “buy” ratings and two “hold” ratings in the previous three months. Meanwhile, BioMarin’s average analyst price target of $117 suggests big upside potential of 25.8% from the current share price.
Biotech Stocks to Buy: Celgene (CELG)
This major biotech has received six back-to-back “buy” ratings in under a week. Analysts approved of Celgene Corporation’s (NASDAQ:CELG) decision to buy a $263 million stake in China’s BeiGene Ltd (ADR) (NASDAQ:BGNE).
The deal gives Celgene the ex-Asia rights to Beigene’s BGB-A317, a cancer drug which treats solid tumors.
SunTrust analyst Yatin Suneja says the deal “bolsters Celgene’s solid tumor portfolio with a mid-to-late stage (immunoncology) asset.” Saneja adds that, previously, Celgene only had a very limited solid tumor treatment offering.
She has an optimistic $150 price target on the stock, which is just above the $148.25 analyst average price target.
The price target translates into strong upside potential of 10.2% from the current share price.
Biotech Stocks to Buy: Vertex (VRTX)
Since the beginning of the year, shares in biotech Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) have soared from $75 to the current $128 share price. The company specializes in cystic fibrosis, a deadly genetic disease, which is estimated to affect about 75,000 people worldwide.
Analysts are growing increasingly confident on VRTX stock, with recent upgrades from both Oppenheimer and Needham. Top Needham analyst Alan Carr upgraded his rating on Vertex at the end of June, with a bullish $155 price target (18.33% upside potential).
He is expecting that one of the four candidates currently being tested as part of VRTX’s triple-drug therapy for cystic fibrosis will be safe and effective, and that this new drug will be launched in 2020.
“Our decision [to upgrade] is driven primarily by our belief that 1) triple regimen program potential for success is sufficiently favorable and 2) the cystic fibrosis landscape continues to favor Vertex, given substantial lead in a market with few competitors.”
Biotech Stocks to Buy: Alexion Pharmaceuticals (ALXN)
Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) is a company that develops drugs for devastating and rare diseases. If we look at only ratings from the best-performing analysts, then this biotech giant has a “strong buy” analyst consensus rating.
Meanwhile the average analyst price target suggests ALXN has impressive upside potential of 20.4% from the current share price.
Shares are already recovering after falling over 3.5% on July 6 on the Department of Health and Human Service’s announcement of an “open and ongoing” investigation into ALXN. Luckily for investors, the news does not seem to have overly worried analysts.
“This investigation is related to prior investigation that Alexion knew about in December of 2016 and disclosed in their 10-Q on Jan 2017,” explained Nomura analyst Christopher Marai, adding: “I believe that there will be minimal impact.”
Biotech Stocks to Buy: Cutera (CUTR)
This biotech specializes in removing various unwelcome body parts such as cellulite, pigmentation, hair, veins and acne scars.
She believes that revenue will rise from sales force expansion and new products, which have been boosted by recent laser dermatology acquisitions. Tsai reiterated her “buy” rating on Cutera on June 27 with a $33 price target, which translates into an incredible 21% upside from the current share price.
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