Biotech stocks were among the worst performers in 2023. And so far in 2024, investors are still waiting on the recovery rally. Many small-cap biotech stocks are being held back by the Fed’s more restrictive stance on interest rates. But even some of the large-cap names with commercially available drugs that are household names are also underperforming the market.
But “some” isn’t the same as “all.” In a stock picker’s market, you want to find the stocks that have a chance to outperform. One way to find these stocks is to look at analyst ratings. The three stocks in this article all have multiple Strong Buy ratings from analysts in addition to bullish price targets. Two of the stocks mentioned are Dividend Kings, which give you the added benefit of compounding as you hold the stock.
Analyst ratings aren’t always an exact correlation, but they are a helpful way to narrow your focus and hone your research. That’s particularly important when it comes to the notoriously volatile biotech sector.
AbbVie (ABBV)
It may not be getting the headlines of some biotech companies, but AbbVie (NYSE:ABBV) remains one of the best biotech stocks for investors in 2024. From April 2022 to October 2023, ABBV stock was in a downtrend over concerns about the patent cliff for its flagship drug, Humira. And it’s fair to note that AbbVie’s top and bottom-line numbers are down on a year-over-year basis in the last two quarters.
That being said, the company has still beaten analysts’ expectations in both quarters. And the stock is up 14.2% in that time. One reason is the erosion in Humira revenue hasn’t been as bad as feared. The other is the company is making up for a good bit of that lost revenue through sales of Skyrizi and Rinvoq.
AbbVie consistently posts a return on equity (ROE) greater than the industry average. Some naysayers will point to the company’s high debt-to-equity ratio as a reason for that strong ratio. However, a forward P/E ratio of just 15x reflects the value present in ABBV stock. Plus, you’re getting a Dividend King that has increased its dividend for 52 consecutive years and has a 3.44% yield.
Johnson & Johnson (JNJ)
Johnson & Johnson (NYSE:JNJ) is another Dividend King among the biotech stocks to buy in April. The company has increased its dividend in each of the last 62 years. When you consider just how much the economy has been through in that time, you’ll understand why JNJ stock offers such great value.
JNJ stock has been in a downtrend since August 2023. That has continued into 2024 with the stock down 3.48% in the year to date. This is a period in which investors are pricing the company without its personal care division, which spun off as Kenvue (NYSE:KVUE) early in 2023.
But the bullish case for Johnson & Johnson revolves around its recent announcement that it was acquiring Shockwave Medical (NASDAQ:SWAV) for $13.1 billion. That gives JNJ’s growing MedTech division access to Shockwave’s first-to-market intravascular lithotripsy technology (ILT) using sonic pressure to crack calcium lesions in arteries — similar to the process used to break up kidney stones.
CRISPR Therapeutics (CRSP)
Many promising biotech stocks are of the small- or mid-cap variety. That’s the case with CRISPR Therapeutics (NASDAQ:CRSP), which is at the forefront of the gene editing sector. It is a sector valued at $1.89 billion in 2022 but may be worth as much as $15.8 billion by 2031.
The company’s proprietary CRISPR gene editing tool can cut DNA fragments at precise points to correct faulty genes and eliminate underlying conditions created by those genes.
In December 2023, CRISPR’s Casgevy gene therapy, developed in partnership with Vertex Pharmaceuticals (NASDAQ:VRTX) received FDA approval for treating sickle cell disease for patients over 12 years old. Casgevy is only one of many gene therapy treatments in the company’s pipeline.
CRSP stock is down approximately 21% in the 30 days ending April 10. But with no news to speak of, this may just be a case of some profit-taking as sentiment shifts to a risk-off posture. Still, 13 out of 29 analysts give CRSP stock a Strong Buy rating with a consensus price target of $85.74, 38% above its current price.
On the date of publication, Chris Markoch did not hold (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.
