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This week, biotech was a standout performer. As of Friday morning, the SPDR S&P Biotech ETF (XBI - Free Report) delivered gains of 6.42% versus gains of 1.79%. Last year biotech was a significant laggard. However, in the past few months, biotech stocks have completely reversed course and changed character in a big way. For example, XBI is now well above its 200-day moving average, while most index ETFs are below it or are just challenging it now.
Image Source: Zacks Investment Research
Pictured: Biotech has flipped from underperformer to outperformer recently.
Today we will cover some lesser-known biotech stocks with blockbuster potential:
Catalyst Pharma Inc (CPRX - Free Report) is a biopharmaceutical company focused on the development and commercialization of therapies targeting rare neurological diseases and disorders such as Lamber-Eaton Myasthenic Syndrome (LEMS), epilepsy, and Tourette syndrome. While biotech and the general market sank over the past few years, CPRX chugged higher. In fact, since its 2022 lows, the stock has more than quadrupled.
Image Source: Zacks Investment Research
Pictured: CPRX vs. SPY. CPRX has been one of the top performers in the market in recent years.
What makes Catalyst Pharma so unique, and what is driving its performance? CPRX has one active product currently driving its earnings called Firdapse, which is used to treat Lambert-Eaton Syndrome. Unlike most biotech stocks, CPRX is profitable and is rapidly growing both earnings and revenues. Last quarter, EPS shot up by 86% on revenues which grew 59%. The company is actively searching for new products to acquire with the proceeds from its current blockbuster drug.
Image Source: Zacks Investment Research
Pictured: Unlike most biotechs, CPRX is profitable and growing rapidly.
CPRX continues to trend higher; however, the stock is currently stretched and should be purchased on pullbacks to the 50-day moving average zone.
Image Source: Zacks Investment Research
Pictured: CPRX is streched now. The 50-day moving average has provided good risk-reward entries to investors.
Prometheus Biosciences is a biotechnology company involved in the discovery, development, and commercialization of novel therapeutic and companion diagnostic products for the treatment of inflammatory bowel disease. The company came public in March 2021; however, the stock has produced fireworks in just a short time. On December 7th, RXDX unveiled stellar results for its inflammatory bowel disease drug. Nearly 30% of Crohn’s disease patients who took the drug experienced remission in just four months’ time. Investors applauded the news, sending shares higher by 165.67% on the day on volume turnover ten times the norm.
Image Source: Zacks Investment Research
Pictured: RXDX shot higher after receiving encouraging results on its Crohn's disease drug.
Since the news was unveiled, shares have largely moved sideways before breaking out this week to new highs. Though the stock has more than quadrupled in the last few months, analysts believe there is more upside. Most analysts tracked by Zack’s have the stock listed as a “strong buy” with an average price target of $137.10 and a high price target of $185 (the stock is currently at $119). The stock currently holds a solid overall Zack’s Ranking of 2.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
Pictured: Even after the large price move, analysts still believe there is room in shares of RXDX.
Investors will want to see shares hold the breakout zone around $117 for the stock to be in play.
Sage Therapeutics Inc (SAGE - Free Report) is a biopharmaceutical company developing medicines to treat life-threatening central nervous system (CNS) disorders. The company provides treatments for diseases such as schizophrenia, major depressive disorder, pain, and traumatic brain injury conditions. Depression, anxiety, and similar mental health issues have been on the rise in the United States. Unfortunately, the Coronavirus pandemic has only escalated those issues.
This week, SAGE was a standout performer. Shares rose nearly 20% on the week and hit multi-month highs.
Image Source: Zacks Investment Research
Pictured: SAGE staged one of the bigger breakouts in biotech this week.
SAGE currently has a poor Zack’s Ranking of 4; however, that could change in a hurry. The company is expected to get results for its phase three drug trial sometime in February. Investors should expect a wild move in one direction or another at that point.
Summary
A plethora of biotech stocks are showing price strength versus the market. Investors who trade these stocks should always be aware that biotech stocks inherently have more binary event risk than most other industry groups. Investors who want to participate in the group strength while eliminating single stock risk should focus on ETFs such as XBI or the iShares Biotech ETF (IBB - Free Report) ).
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Biotech's Blockbuster Week: 3 Stocks to Watch
This week, biotech was a standout performer. As of Friday morning, the SPDR S&P Biotech ETF (XBI - Free Report) delivered gains of 6.42% versus gains of 1.79%. Last year biotech was a significant laggard. However, in the past few months, biotech stocks have completely reversed course and changed character in a big way. For example, XBI is now well above its 200-day moving average, while most index ETFs are below it or are just challenging it now.
Image Source: Zacks Investment Research
Pictured: Biotech has flipped from underperformer to outperformer recently.
Today we will cover some lesser-known biotech stocks with blockbuster potential:
Catalyst Pharma Inc (CPRX - Free Report) is a biopharmaceutical company focused on the development and commercialization of therapies targeting rare neurological diseases and disorders such as Lamber-Eaton Myasthenic Syndrome (LEMS), epilepsy, and Tourette syndrome. While biotech and the general market sank over the past few years, CPRX chugged higher. In fact, since its 2022 lows, the stock has more than quadrupled.
Image Source: Zacks Investment Research
Pictured: CPRX vs. SPY. CPRX has been one of the top performers in the market in recent years.
What makes Catalyst Pharma so unique, and what is driving its performance? CPRX has one active product currently driving its earnings called Firdapse, which is used to treat Lambert-Eaton Syndrome. Unlike most biotech stocks, CPRX is profitable and is rapidly growing both earnings and revenues. Last quarter, EPS shot up by 86% on revenues which grew 59%. The company is actively searching for new products to acquire with the proceeds from its current blockbuster drug.
Image Source: Zacks Investment Research
Pictured: Unlike most biotechs, CPRX is profitable and growing rapidly.
CPRX continues to trend higher; however, the stock is currently stretched and should be purchased on pullbacks to the 50-day moving average zone.
Image Source: Zacks Investment Research
Pictured: CPRX is streched now. The 50-day moving average has provided good risk-reward entries to investors.
Prometheus Biosciences is a biotechnology company involved in the discovery, development, and commercialization of novel therapeutic and companion diagnostic products for the treatment of inflammatory bowel disease. The company came public in March 2021; however, the stock has produced fireworks in just a short time. On December 7th, RXDX unveiled stellar results for its inflammatory bowel disease drug. Nearly 30% of Crohn’s disease patients who took the drug experienced remission in just four months’ time. Investors applauded the news, sending shares higher by 165.67% on the day on volume turnover ten times the norm.
Image Source: Zacks Investment Research
Pictured: RXDX shot higher after receiving encouraging results on its Crohn's disease drug.
Since the news was unveiled, shares have largely moved sideways before breaking out this week to new highs. Though the stock has more than quadrupled in the last few months, analysts believe there is more upside. Most analysts tracked by Zack’s have the stock listed as a “strong buy” with an average price target of $137.10 and a high price target of $185 (the stock is currently at $119). The stock currently holds a solid overall Zack’s Ranking of 2.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
Pictured: Even after the large price move, analysts still believe there is room in shares of RXDX.
Investors will want to see shares hold the breakout zone around $117 for the stock to be in play.
Sage Therapeutics Inc (SAGE - Free Report) is a biopharmaceutical company developing medicines to treat life-threatening central nervous system (CNS) disorders. The company provides treatments for diseases such as schizophrenia, major depressive disorder, pain, and traumatic brain injury conditions. Depression, anxiety, and similar mental health issues have been on the rise in the United States. Unfortunately, the Coronavirus pandemic has only escalated those issues.
This week, SAGE was a standout performer. Shares rose nearly 20% on the week and hit multi-month highs.
Image Source: Zacks Investment Research
Pictured: SAGE staged one of the bigger breakouts in biotech this week.
SAGE currently has a poor Zack’s Ranking of 4; however, that could change in a hurry. The company is expected to get results for its phase three drug trial sometime in February. Investors should expect a wild move in one direction or another at that point.
Summary
A plethora of biotech stocks are showing price strength versus the market. Investors who trade these stocks should always be aware that biotech stocks inherently have more binary event risk than most other industry groups. Investors who want to participate in the group strength while eliminating single stock risk should focus on ETFs such as XBI or the iShares Biotech ETF (IBB - Free Report) ).