Biotech industry continues to make resurgence after this industry has seen a year of dismal performance, resulting in S&P Biotechnology Select Industry Index losing over ~50% of the value from peak in early 2021. This index measures the performance of stocks catering to the biotechnology industry. Higher interest rates and normalisation of pandemic-era increases resulted in bearish sentiment of the investors. With biotech stocks trading at lower levels, investors should consider most promising biotech stocks to buy in the current economic environment. Recent developments, technological advancement and favourable economic environment related to interest rate reductions, resulted in strong rally for overall industry, with index increasing ~29% since October end.
M&A’s in biotech industry continues to pick up pace post the disappointing performance seen in the last year. As per the recent report by PwC, 2023 was a strong year for overall pharmaceutical and life sciences sectors as both deal value and volumes related to M&A are near levels seen in pre-pandemic era. Collectively, these sectors saw ~$222 billion worth of mergers and acquisition deals for 12 months to November 16, 2023.
Most promising biotech stocks to buy include the companies which are expected to outperform the overall industry’s performance. Certain transactions which have gathered investors’ attention include Pfizer Inc.’s agreement for the acquisition of Seagen Inc. consisting the cash consideration of $43 billion, acquisition agreement to acquire Prometheus Biosciences, Inc. by Merck & Co., Inc. for the consideration of $10.8 billion, and AbbVie Inc.’s agreement for the acquisition of Cerevel Therapeutics for ~$8.7 billion, etc.
Recent developments in biotechnology industry, apart from long-standing affinity for rare along with debilitating diseases, include resurgence of therapies which aim for obesity. In August 2023, Novo Nordisk released SELECT trial results exhibiting that GLP-1 weight loss medicine Wegovy resulted in reduction of risk of adverse cardiovascular events in adults. These adults are overweight or obese which led to cardiovascular disease having no prior history of diabetes.
With this in mind, let us now have a look at most promising biotech stocks to buy as per Wall Street analysts.
1. Moderna, Inc.
The company is a commercial-stage biotech which got founded in 2010 and saw its initial public offering in the month of December 2018.
It has released financial results for 3Q ended 2023, with its revenues coming at $1.8 billion and Spikevax U.S. market share to date increasing to 45% from 36% in 2022.
It significantly improved future cost of sales through resizing manufacturing capacity, resulting in third quarter net loss of $3.6 billion. This was mainly because of mostly non-cash charges of $3.1 billion associated with resizing and tax valuation allowance. The company anticipates 2023 revenues of minimum $6 billion. It expects to break even in 2026 as a result of product launches and disciplined investment.
Cim Investment Management Inc. raised its stake in the company’s shares by ~4.2% in 1Q. Post this transaction, the fund management company owns 2,139 shares of the company’s stock for the consideration of $329,000 after purchasing additional 86 shares during 1Q. Another investment management company, Cetera Advisor Networks LLC raised stake in the company’s shares by 0.5% in 4Q. Cetera Advisor Networks LLC presently owns ~17,195 shares of its stock for the consideration of $3,088,000 post purchasing additional 87 shares during last quarter.
2. Royalty Pharma plc
The company is the buyer of biopharmaceutical royalties and funder of innovation throughout the biopharmaceutical industry.
It released financial results for 3Q23 and increased its full-year 2023 guidance for adjusted cash receipts. Net cash provided by operating activities saw an increase of 6% to $574 million, with net cash used in investing activities coming at $451 million and net cash used in financing activities reaching $1.4 billion. Total income and other revenues came in at $536 million.
The company’s adjusted cash receipts went up by 7% to $637 million as a result of strong performances of the CF franchise and Trelegy, together with addition of Spinraza, partially offset by the royalty expirations and Imbruvica headwinds. Adjusted cash receipts saw an increase of 9% before the Biohaven-related payment received in previous-year period.
It now expects 2023 adjusted cash receipts of between $2,950 million – $3,000 million (previously $2,900 million to $2,975 million), which excludes future transactions. The guidance exhibits underlying growth of 9% – 11% prior to non-recurring biohaven-related payments.
Analysts at Morgan Stanley increased their price target on the company’s shares from $54.00 to $57.00, giving the stock an “Overweight” rating in the research note dated November 9th.
Captrust Financial Advisors increased its holdings in the company’s shares by 210.8% during 2Q. The company owns ~805 shares of the biopharmaceutical company’s stock for the consideration of $34,000 post purchasing additional 546 shares.
3. TG Therapeutics, Inc.
The company is the biopharmaceutical company.
It has released its financial results for 3Q ended 2023, with its total net revenue coming at $165.8 million, consisting quarterly BRIUMVI® net sales of $25.1 million in the US, and license revenue of $140.0 million from upfront payment received from Neuraxpharm.
Analysts at JPMorgan Chase & Co. increased its price objective on the company’s shares from $22.00 to $23.00, giving the company an “Overweight” rating in the research report dated November 1st. Another research firm, Jefferies Financial Group, reiterated the “Buy” rating on the company’s shares. It gave the $23.00 price target on its shares in research note dated November 1st.
Cim Investment Management Inc. increased stake in the company’s shares by ~3.6% during 1Q. The investment firm now owns ~15,521 shares of the company’s stock for the consideration of $233,000 after purchasing additional 535 shares during last quarter.
Conclusion
The above-mentioned most promising biotech stocks to buy as per Wall Street analysts are late-stage clinical-stage biotechnology companies that continue to work for the development of novel therapeutics for rare diseases. The above list includes the stocks which are not highly volatile in the present environment. The companies are preferred high-growth companies having actual long-term growth catalysts.
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