Medical stocks, in general, aren’t enjoying the market-wide reversal we’re seeing in the back half of 2023. The Morningstar US Healthcare Index, which measures a range of biotech, pharma, medical device and healthcare facility companies, has returned less than 1% since January. Compare that performance to the S&P 500’s rapid mid-March reversal and 20% jump since then, and healthcare stockholders’ woes are understandable.
Despite strained supply chains and an industry-wide inability to readapt to post-pandemic “business as usual,” some healthcare stocks remain afloat. For bullish investors, though, few sectors beat biotech. With massive potential, and risk, a biotech investment can quickly become the best-performing stock in your portfolio. These three strong buy biotech stocks are analyst favorites and priced right. That’s a rare combo that investors should take advantage of before it’s too late.
Moderna (MRNA)
Moderna (NASDAQ:MRNA) hit a mid-pandemic peak on the heels of its mRNA vaccine, peaking at almost $450 per share in September 2021. Since then, as COVID-19 revenues finish running their course, the stock is down almost 75% from its peak. But pandemic offerings weren’t all Moderna has in its toolkit, and the market is overlooking the biotech firm’s future opportunities.
Moderna has dozens of mRNA therapeutics and medicines in its pipeline, including multiple flu, HIV and cancer treatments. Furthermore, many of these potential future products are nearing the end of clinical testing, indicating they’ll soon be on the market. Research and development within biotech and pharmaceuticals is costly, but Morningstar estimates several products pending approval will likely hit $1 billion in annual sales. This proves Moderna is more than a one-trick pony. Its future on the global stage seems inevitable despite bottom-barrel pricing today.
Crispr Therapeutics AG (CRSP)
Crispr Therapeutics AG (NASDAQ:CRSP) is one of few, if not the only, gene editing firms in healthcare with a viable clinical-stage product. The company’s CRISPR technology tweaks and modifies DNA to treat genetic diseases and mutations. The technology is still in its infancy and hasn’t yet reached the market. Because it is a new technology, many consider Crispr too risky today. This perspective is misguided though, and Crispr has the potential to be one of the biggest companies in the world within the next few decades.
Much of the uncertainty surrounding Crispr has little to do with its core technology or operational proposition. Instead, concerns abound regarding regulatory restrictions. Because Crispr is the first pure-play gene editing firm close to market, there’s little-to-no precedent in place to predict how regulators will address gene editing-enabled healthcare outcomes. Still, Crispr undoubtedly has a place at the table for investors watching healthcare’s future. The stock will likely see continued volatility over the next few years until its pipeline matures. Still, investors who miss the boat today will kick themselves once the water settles in the next ten or so years.
Biogen (BIIB)
Biogen (NASDAQ:BIIB) is a hidden gem amid biotech stocks. The company has a proven, effective and demonstrably beneficial series of multiple sclerosis therapeutics. It’s also expanding its scope and has many more neurological treatments in development.
Despite its proven viability, the company is down 20% over the past five years and relatively flat since January.
Much of the recent negative sentiment surrounds staff cuts and uncertainty over an imminent FDA decision. Still, short-term concerns aside, Biogen is here to stay. Its operational management and prudent financial strategies position the firm head and shoulders above its competitors.
The company has a firm grasp of the multiple sclerosis treatment market, with its original therapeutic portfolio continually generating $2 billion in annual sales. At the same time, expansion into the broader neurological market prove the firm isn’t content to rest on its laurels. The company’s consistent cash flow also caps its debt levels, critical in a capital-hungry industry like biotech.
The FDA will release a decision soon on Biogen’s latest venture, a depression drug. The stock could quickly soar on just a whiff of good news. The FDA decision might be a shot in the arm Biogen needs.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
