Ahead of what could be significant uncertainties in the market, investors may be better served with cutting-edge biotech stocks. Fundamentally, the reasoning centers on relative insulation.
Of course, no sector is ever fully insulated from the equity sector’s ebb and flow. And even established blue chips may suffer volatility if the major indices print red ink. However, certain compelling biotech stocks to buy offer overwhelming relevance. Irrespective of economic conditions, society will likely always incentivize the drive for therapeutic innovations.
On a related note, biotech stocks enjoy the general ability to march to its own beat. For sector enterprises leveraging the latest advancements in medicine and technology, the emphasis largely focuses on clinical results. To be fair, that can be good and bad, depending on said results.
However, for those tired of always having to monitor the Federal Reserve to determine their best investment decisions, the biotechnology ecosystem may offer an unusual respite of sorts. With that, below are three risky but enticing biotech stocks to buy.
Based in New York City, Schrodinger (NASDAQ:SDGR) presents a distinct take among biotech stocks to buy. Per its website, Schrodinger features a physics-based computational platform that leverages a deep understanding of physics, chemistry and predictive modeling to accelerate innovation. Through its platform, the company enables its collaborators to discover novel, high-quality molecules more rapidly at lower cost.
Technically, SDGR would fall under the scientific software category so it wouldn’t be a pure-play candidate for biotech stocks. Nevertheless, I mention SDGR because over time, the biotech industry will likely leverage artificial intelligence and machine learning to accelerate therapeutic discoveries. In addition, they can utilize these innovations to quickly dismiss what doesn’t work, thereby saving time and precious resources.
Since the start of the year, SDGR gained more than 49% of equity value, reflecting broader enthusiasm. However, it’s been down sharply since its 52-week high, implying a possible upside opportunity. Analysts seem to think so, rating shares a moderate buy with a $40.33 target, projecting almost 48% upside.
Another exciting entity among innovation-driven biotech stocks to buy, Exscientia (NASDAQ:EXAI) bills itself as the world’s leading pharmatech. Per its website, Exscientia utilizes AI to precision engineer future drugs for patients and thereby revolutionize drug discovery. Also, the company states that it’s spearheading the aforementioned revolution through the first AI-designed molecules to reach clinical trials.
Fundamentally, this novel approach may spark a paradigm shift in medicine. Specifically, Exscientia is on a mission to create a patient-first AI model to yield medicines with improved probability of success. It seeks to accomplish this directive through information extracted from patient tissue combined with carefully engineered molecular solutions. Frankly, it almost seems like science fiction.
To be fair, EXAI has struggled since its public market debut in 2021, losing almost 81% of equity value. Still, the red ink appears to have stabilized this year, possibly suggesting a rebound. Analysts are enthused, pegging EXAI a consensus strong buy with a $9.50 target, implying 81% growth.
Ginkgo Bioworks (DNA)
Founded in 2008 by five scientists from the Massachusetts Institute of Technology, Ginkgo Bioworks (NYSE:DNA) is one of the most scientifically compelling biotech stocks to buy. Fundamentally, the company specializes in using genetic engineering to produce bacteria with industrial applications for other biotech firms. By doing so, Ginkgo is able to save these client enterprises the cost of reproducing the initial stages of design in synthetic biology.
According to Market Research Future, the genetic engineering sector may reach a valuation of $5.81 billion by 2030. If so, this tally would represent a compound annual growth rate (CAGR) of 24.2% from 2022 levels. In addition, Ginkgo may potentially leverage other innovations to feed demand across multiple biotech subsegments. Thus, on paper, DNA stock seems an enticing opportunity.
However, it’s also a significant risk. Since the January opener, DNA stock dropped 19%. In the trailing one-year period, it tanked more than 52%. Priced at a little over $1, it may run the risk of violating listing requirements.
Still, analysts rate DNA a moderate buy with a $4 target, projecting almost 213% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.