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Fresh Capital to Be Injected into Biotech Stocks: 5 Must-Buys
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The recent rally in tech stocks makes us wonder which other sectors are in a position to lead the charge. One sector that comes to our mind is biotechnology, which is well positioned to move north. Biotech stocks have appeared to come back to life following two years of a lull. A flurry of biotech stocks had topped in the summer of 2015, losing steam soon after.
Now, however, they are on the verge of a break out cashing on President Trump’s tax plan spurring waves of buyouts, innovation reaching exponential levels and drug price outrage easing out. Hence, investing in solid biotech stocks seems to be judicious.
Biotech to Break Out
Investors have steered clear of tech behemoths that constitute the bulk of growth stocks on overvaluation concerns. As they believe that they will simply lose too much money here, they repositioned themselves in biotech stocks. Even though this space was caught in the crossfire during the 2016 presidential election on “price gouging” concerns, it has recovered somewhat. Calithera Biosciences Inc (CALA - Free Report) , Esperion Therapeutics Inc (ESPR - Free Report) and Puma Biotechnology Inc (PBYI - Free Report) have all added more than 100% this year, a clear indication that when money flows into biotech stocks, they soar.
The iShares NASDAQ Biotechnology Index (IBB - Free Report) rose about 17% since Trump’s win. It, however, has more room to climb as it is still down 23% from its all-time intraday high attained in the July of 2015. This makes it an enticing bet for value investors. They look for companies that are fundamentally solid but underpriced and the IBB’s components fit the bill.
M&A to Spur Growth, An Island of Innovation
Trump has promised to change the tax code so that companies can bring back cash held overseas. This in turn is expected to spur a series of buyouts among innovation starved biotech companies looking for growth. Quantum of deals in this sector has remained low for almost five years. Jay Rao, a medical doctor and money manager at Balyasny Asset Management, says that “M&A and consolidation are inevitable” in the biotech sector. Big pharma companies, in the meantime, have already over $500 billion in cash to invest in merger and acquisition activities.
When it comes to innovation, investors look at Silicon Valley. But, biotech companies aren’t lagging much. Rao added that “advances in biology and science are breathtaking, and they are creating tangible benefits for patients”. Primary examples of such companies are Regeneron Pharmaceuticals Inc (REGN - Free Report) , Vertex Pharmaceuticals Incorporated (VRTX - Free Report) and Kite Pharma Inc .
Drug Price Outrage Eased
One fear that has haunted biotech companies is the possibility of a draconian crackdown on drug prices in Washington D.C. But, Rao said that Washington will find it difficult to impose any price controls with Tom Price as secretary of Health and Human Services since he has a history of rejecting this sort of policies.
Moreover, politicians are likely to crack down on products that are visible to consumers like EpiPen. We shouldn’t forget that such a product is relatively cheap compared to some of the expensive specialized therapies. Furthermore, the pharma industry did a commendable job by showing politicians that drug costs constitute relatively a small portion of the overall health-care expenses. At the same time, they argued that expensive drugs can save money by eliminating chronic diseases and keeping people out of hospitals.
5 Top Biotech Stocks to Buy Now
Taking such aforesaid bullish trends into consideration, it will be prudent to invest in fundamentally sound biotech firms. We have, thus, selected five biotech stocks that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Regeneron Pharmaceuticals is a biopharmaceutical company that discovers, invents, develops, manufactures and commercializes medicines for the treatment of serious medical conditions. The company has a Zacks Rank #1. The company’s expected growth rate for the current year is 27.4%, more than the Medical - Biomedical and Genetics industry’s projected gain of 6.3%. Regeneron has outperformed the broader industry in the year-to-date period (+35% vs. +6.4%).
Cambrex Corporation provides products and services for the development and commercialization of generic therapeutics. The company has a Zacks Rank #2. The company’s expected growth rate for the current year is 8.5%, more than the Medical - Biomedical and Genetics industry’s projected gain of 6.3%. Cambrex has outperformed the broader industry in the year-to-date period (+10.1% vs. +6.4%).
Geron Corporation (GERN - Free Report) is a biopharmaceutical company. It is engaged in the development of therapeutic products for oncology. The company has a Zacks Rank #2. The company’s expected growth rate for the current year is 92.1%, more than the Medical - Biomedical and Genetics industry’s projected gain of 6.3%. Geron has outperformed the broader industry in the year-to-date period (+32.9% vs. +6.4%). You can see the complete list of today’s Zacks #1 Rank stocks here.
Anavex Life Sciences Corp. (AVXL - Free Report) , a clinical stage biopharmaceutical company, engages in the development of drug candidates for the treatment of Alzheimer’s disease, other central nervous system diseases, pain, and various cancer. The company has a Zacks Rank #2. The company’s expected growth rate for the current year is 11.9%, more than the Medical - Biomedical and Genetics industry’s projected gain of 6.3%. Anavex has outperformed the broader industry in the year-to-date period (+35.9% vs. +6.4%).
Histogenics Corp is a regenerative medicine company. The company is focused on developing and commercializing products in the musculoskeletal segment of the marketplace. The company has a Zacks Rank #2. The company’s expected growth rate for the current year is 48.1%, more than the Medical - Biomedical and Genetics industry’s projected gain of 6.3%. Histogenics has outperformed the broader industry in the last three months (+2.5% vs. +0.5%).
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them? Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trade>>
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Fresh Capital to Be Injected into Biotech Stocks: 5 Must-Buys
The recent rally in tech stocks makes us wonder which other sectors are in a position to lead the charge. One sector that comes to our mind is biotechnology, which is well positioned to move north. Biotech stocks have appeared to come back to life following two years of a lull. A flurry of biotech stocks had topped in the summer of 2015, losing steam soon after.
Now, however, they are on the verge of a break out cashing on President Trump’s tax plan spurring waves of buyouts, innovation reaching exponential levels and drug price outrage easing out. Hence, investing in solid biotech stocks seems to be judicious.
Biotech to Break Out
Investors have steered clear of tech behemoths that constitute the bulk of growth stocks on overvaluation concerns. As they believe that they will simply lose too much money here, they repositioned themselves in biotech stocks. Even though this space was caught in the crossfire during the 2016 presidential election on “price gouging” concerns, it has recovered somewhat. Calithera Biosciences Inc (CALA - Free Report) , Esperion Therapeutics Inc (ESPR - Free Report) and Puma Biotechnology Inc (PBYI - Free Report) have all added more than 100% this year, a clear indication that when money flows into biotech stocks, they soar.
The iShares NASDAQ Biotechnology Index (IBB - Free Report) rose about 17% since Trump’s win. It, however, has more room to climb as it is still down 23% from its all-time intraday high attained in the July of 2015. This makes it an enticing bet for value investors. They look for companies that are fundamentally solid but underpriced and the IBB’s components fit the bill.
M&A to Spur Growth, An Island of Innovation
Trump has promised to change the tax code so that companies can bring back cash held overseas. This in turn is expected to spur a series of buyouts among innovation starved biotech companies looking for growth. Quantum of deals in this sector has remained low for almost five years. Jay Rao, a medical doctor and money manager at Balyasny Asset Management, says that “M&A and consolidation are inevitable” in the biotech sector. Big pharma companies, in the meantime, have already over $500 billion in cash to invest in merger and acquisition activities.
When it comes to innovation, investors look at Silicon Valley. But, biotech companies aren’t lagging much. Rao added that “advances in biology and science are breathtaking, and they are creating tangible benefits for patients”. Primary examples of such companies are Regeneron Pharmaceuticals Inc (REGN - Free Report) , Vertex Pharmaceuticals Incorporated (VRTX - Free Report) and Kite Pharma Inc .
Drug Price Outrage Eased
One fear that has haunted biotech companies is the possibility of a draconian crackdown on drug prices in Washington D.C. But, Rao said that Washington will find it difficult to impose any price controls with Tom Price as secretary of Health and Human Services since he has a history of rejecting this sort of policies.
Moreover, politicians are likely to crack down on products that are visible to consumers like EpiPen. We shouldn’t forget that such a product is relatively cheap compared to some of the expensive specialized therapies. Furthermore, the pharma industry did a commendable job by showing politicians that drug costs constitute relatively a small portion of the overall health-care expenses. At the same time, they argued that expensive drugs can save money by eliminating chronic diseases and keeping people out of hospitals.
5 Top Biotech Stocks to Buy Now
Taking such aforesaid bullish trends into consideration, it will be prudent to invest in fundamentally sound biotech firms. We have, thus, selected five biotech stocks that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Regeneron Pharmaceuticals is a biopharmaceutical company that discovers, invents, develops, manufactures and commercializes medicines for the treatment of serious medical conditions. The company has a Zacks Rank #1. The company’s expected growth rate for the current year is 27.4%, more than the Medical - Biomedical and Genetics industry’s projected gain of 6.3%. Regeneron has outperformed the broader industry in the year-to-date period (+35% vs. +6.4%).
Cambrex Corporation provides products and services for the development and commercialization of generic therapeutics. The company has a Zacks Rank #2. The company’s expected growth rate for the current year is 8.5%, more than the Medical - Biomedical and Genetics industry’s projected gain of 6.3%. Cambrex has outperformed the broader industry in the year-to-date period (+10.1% vs. +6.4%).
Geron Corporation (GERN - Free Report) is a biopharmaceutical company. It is engaged in the development of therapeutic products for oncology. The company has a Zacks Rank #2. The company’s expected growth rate for the current year is 92.1%, more than the Medical - Biomedical and Genetics industry’s projected gain of 6.3%. Geron has outperformed the broader industry in the year-to-date period (+32.9% vs. +6.4%). You can see the complete list of today’s Zacks #1 Rank stocks here.
Anavex Life Sciences Corp. (AVXL - Free Report) , a clinical stage biopharmaceutical company, engages in the development of drug candidates for the treatment of Alzheimer’s disease, other central nervous system diseases, pain, and various cancer. The company has a Zacks Rank #2. The company’s expected growth rate for the current year is 11.9%, more than the Medical - Biomedical and Genetics industry’s projected gain of 6.3%. Anavex has outperformed the broader industry in the year-to-date period (+35.9% vs. +6.4%).
Histogenics Corp is a regenerative medicine company. The company is focused on developing and commercializing products in the musculoskeletal segment of the marketplace. The company has a Zacks Rank #2. The company’s expected growth rate for the current year is 48.1%, more than the Medical - Biomedical and Genetics industry’s projected gain of 6.3%. Histogenics has outperformed the broader industry in the last three months (+2.5% vs. +0.5%).
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them? Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trade>>