7 Undervalued Biotech Stocks That are Flying Under the Clinical Radar


  • Harmony Biosciences (HRMY): Undervalued narcolepsy drug developer with high growth potential.
  • MacroGenics (MGNX): Rising cancer immunotherapy player with approval for first-of-its-kind type 1 diabetes treatment.
  • Pfizer (PFE): Fading Covid-19 star with potential mRNA therapy growth and undervalued price tag.
  • Read more about these severely undervalued biotech stocks to buy now!
undervalued biotech picks - 7 Undervalued Biotech Stocks That are Flying Under the Clinical Radar

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With so many innovative firms skyrocketing this year, astute investors seeking compelling discounts may want to turn their attention to undervalued biotech picks. Just like advancements in the digital ecosystem, society will continue to invest in clinical breakthrough stocks in the hopes of forwarding treatments to vexing conditions and diseases.

In other words, targeting undervalued biotech picks may provide some economic insulation. Of course, no sector is immune from broader financial headwinds. However, undervalued biotech picks in particular enjoy ongoing relevance because let’s face it – people who get sick often seek therapeutic solutions, irrespective of market conditions.

Plus, with the volatility inherent in the industry, some names may have become significantly de-risked. As a result, speculators should look into the below clinical breakthrough stocks.

Harmony Biosciences (HRMY)

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What it is: Focusing on developing and delivering treatments for rare neurological diseases, Harmony Biosciences (NASDAQ:HRMY) specializes in research and developing drugs for narcolepsy. Per the company’s website, narcolepsy is a rare, chronic, debilitating neurological disorder of sleep-wake state instability. Further, it affects approximately 165,000 Americans.

Relevance: According to Grand View Research, the global narcolepsy therapeutics market size reached a valuation of $3.28 billion last year. Further, experts project that the sector will expand at a compound annual growth rate (CAGR) of 7.85% from 2023 to 2030. At the forecast culmination point, this segment will likely print revenue of just over $6 billion. With Harmony carrying a market capitalization of around $2 billion, HRMY could be one of the hidden biotech gems.

Pros: Currently, the market prices HRMY at forward earnings multiple of 11.42x, lower than 72.46% of its peers. In addition, analysts rate shares a consensus moderate buy with an average price target of $40.67.

Cons: While scientifically intriguing, Harmony lost about 40% of equity value in the trailing 52 weeks.

MacroGenics (MGNX)

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What it is: Focused on cancer immunotherapy, MacroGenics (NASDAQ:MGNX) develops and commercializes monoclonal antibodies. Enticingly, its therapeutic teplizumab received approval from the Food and Drug Administration (FDA) as the first disease-modifying therapy in type 1 diabetes. As well, MGNX is one of the clinical breakthrough stocks in the sense that it gained 28% in the trailing one-month period.

Relevance: Currently, MacroGenics focuses on Margenza, a treatment of adult patients with metastatic HER2-positive breast cancer. According to Strategic Market Research, the underlying global treatment sector reached a valuation of $17.13 billion in 2021. Further, the segment could expand at a compound annual growth rate (CAGR) of 10.4% to hit $41.74 billion by 2030. Thus, the company benefits from a large addressable market.

Pros: Even with the sharp rise in the security, MGNX trades for only 4.75x trailing-year sales. That’s lower than the sector median of 9.23x, making it one of the undervalued biotech picks. Also, analysts peg shares as a strong buy with a $12.86 target, projecting 38% upside.

Cons: Although attractive from a scientific level, MGNX suffers from multiple financial vulnerabilities, including a distressed Altman Z-Score.

Pfizer (PFE)

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What it is: A pharmaceutical giant that needs no introduction, Pfizer (NYSE:PFE) shot itself into the mainstream consciousness when it helped forward a Covid-19 vaccine. However, with fading fears of the SARS-CoV-2 virus, PFE has fallen out of favor with investors. It could be one of the hidden gem stocks but it’s also risky. Since the January opener, it lost 49% of its equity value.

Relevance: Pfizer utilized a messenger-RNA-based approach to develop its vaccine. According to Mordor Intelligence, the global mRNA therapeutics market will likely reach a valuation of $46.83 billion at the end of this year. By 2028, the segment could be worth $101.8 billion, representing a CAGR of 16.8%. Thus, patience could be rewarding for one of the undervalued biotech picks.

Pros: Right now, the market prices PFE at forward earnings multiple of 8.12x, lower than the drug manufacturing industry’s median stat of 14.21x. Analysts also rate shares a moderate buy with an average price target of $34.25, implying 31% upside.

Cons: The pace of negative acceleration hasn’t slowed, with PFE losing more than 13% in the trailing month.

Catalyst Pharma (CPRX)

A magnifying glass zooms in on the website of Catalyst Pharmaceuticals (CPRX).
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What it is: Headquartered in Coral Gables, Florida, Catalyst Pharma (NASDAQ:CPRX) specializes in developing and marketing orphan drugs for rare and neglected diseases. It features a compelling pipeline of FDA-approved therapeutics that address Lambert-Eaton myasthenic syndrome and Duchenne muscular dystrophy. However, it ranks among hidden biotech gems, with CPRX down 20% year-to-date.

Relevance: Fundamentally, Catalyst Pharma could carve a commanding footprint for its core treatment areas. For example, Allied Market Research notes that the global Duchenne muscular dystrophy treatment size reached a value of $1.3 billion in 2021. By 2031, the segment could hit a valuation of $2.07 billion, implying a CAGR of 4.7% from 2022. Keep in mind that Catalyst only features a market cap of $1.54 billion.

Pros: At the moment, CPRX prints a forward earnings multiple of 9.73x, lower than the sector median 21.6X. In addition to being one of the undervalued biotech picks, analysts peg shares a unanimous strong buy with an average target of $25.25. That implies over 74% growth potential.

Cons: CPRX is choppy, requiring investors to have a strong stomach.

Voyager Therapeutics (VYGR)

Biochemical/biotech research scientist team working with microscope
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What it is: Headquartered in Lexington, Massachusetts, Voyager Therapeutics (NASDAQ:VYGR) develops gene therapies for neurological diseases using adeno-associated viral vectors. That’s another advancement stemming from the push to find a vaccine for COVID-19 that offers potentially myriad medical applications. Since the start of the year, VYGR gained almost 30% of equity value, making it one of the more exciting clinical breakthrough stocks.

Relevance: For Voyager, it could potentially ride coattails on the broader global gene editing market, which reached a value of $6.94 billion last year. According to Precedence Research, experts project that the segment could surpass the $29.93 billion valuation target by 2032. If so, that would represent at least a CAGR of 15.73% from 2023.

Pros: Enticingly, the market prices VYGR at a trailing-year earnings multiple of only 6.34x, below the sector median of 31.77x. That qualifies shares for candidacy among undervalued biotech picks. Also, analysts forecast a price target of $14.40, implying almost 85% upside.

Cons: VYGR’s 52-week range goes from $5.27 to $14.34. It’s wild and should therefore only be approached by hardened speculators.

Sanofi (SNY)

Sanofi (SNY) logo on the side of company branch in Germany
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What it is: A French multinational pharmaceutical and healthcare company, Sanofi (NASDAQ:SNY) represents one of the heavyweights among undervalued biotech picks. Therefore, it’s difficult to label SNY a candidate for hidden biotech gems. Nevertheless, SNY may appeal to market gamblers because it just hasn’t gained traction. In the past 52 weeks, shares moved up a little over 2%. That’s it.

Relevance: As a massive entity within the broader pharmaceutical space, Sanofi can move in multiple directions. Historically, the company represented the first worldwide supplier of the injectable polio vaccine. That’s significant because the global vaccines market size will reach $77.6 billion at year’s end. Further, experts project that by 2028, the sector will be worth $93.8 billion, according to MarketsandMarkets.

Pros: Right now, shares trade at only 11.12x forward earnings, below 73.81% of its peers. Also, analysts peg SNY as a moderate buy with a $96.16 price target, implying over 99% upside potential.

Cons: Sanofi has been all over the map recently, especially following its recent earnings miss. Therefore, it presents high risks despite it being historically one of the clinical breakthrough stocks.

Arcturus Therapeutics (ARCT)

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What it is: An intriguing player among hidden biotech gems, Arcturus Therapeutics (NASDAQ:ARCT) is a global late-stage clinical mRNA medicine and vaccines company. It focuses on the discovery, development, and commercialization of therapeutics for rare diseases and vaccines. Further, the company claims proprietary technologies along with key partnerships. Since the start of the year, ARCT gained 68%.

Relevance: Fundamentally, speculators in the know focus on Arcturus’ specialty in RNA-interference (RNAi) technologies. According to Mordor Intelligence, the global RNAi market size will reach a value of $1.17 billion by year’s end. Further, experts project that the segment could hit $2.49 billion by 2028, representing a CAGR of 16.29%. Considering the size of the company – a market cap of $749 million – Arcturus benefits from a large addressable market.

Pros: At the moment, ARCT carries a trailing-year earnings multiple of 7.56X, lower than 91% of its rivals. Also, analysts rate shares a unanimous strong buy with a $73.20 average price target, implying 161% growth.

Cons: As an early stage enterprise, ARCT incurs significant volatility risks.

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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

Article printed from InvestorPlace Media, https://investorplace.com/2023/12/7-undervalued-biotech-stocks-that-are-flying-under-the-clinical-radar/.

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