Biotech stocks are on a roll right now. The IBB (iShares Nasdaq Biotechnology ETF) is up 15% since the start of the year. That’s compared to 11% for the S&P 500. So how can you find the most compelling biotech stock picks?
Because while biotechs can offer staggering rewards, they also come with a high-dose of risk. Prices can surge on positive trial data and regulatory approvals, but can crash if data disappoints or applications are rejected.
Luckily top-rated Mizuho Securities analyst Difei Yang (Track Record & Ratings) has just revealed her favorite biotech stocks for 2019. We can see from TipRanks that she is ranked an extremely impressive #228 out of almost 5,200 tracked analysts.
“Across our coverage, we find many names trading at very attractive valuations with significant upside relative to downside” writes Yang.
She adds: “We favor innovative and ground-breaking therapies in 2019; emerging technologies such as gene therapy and cell therapy could command substantial premiums from large cap pharma/biotech.”
Let’s dive in to her 5 top biotech stock picks now:
1. Aerie Pharmaceuticals
Aerie Pharmaceuticals (AERI– Research Report) has developed two glaucoma drugs with the first new mechanism of action (MoA) in nearly 20 years; Rhopressa (launched in 2018) and Rocklatan. Confidence is high ahead of the critical PDUFA goal date for Rocklatan of 03/14/19.
Yang sees blockbuster potential in Rocklatan following a remarkably strong Rhopressa launch in 2018- one of the best launches in the glaucoma space.
“Limited competition in the glaucoma space, a solid first product launch, strong management execution, coupled with an attractive valuation make Aerie one of our top picks in 2019” the analyst writes.
She has a buy rating on the stock with a $77 price target. With shares currently at $40 we are looking at upside potential of over 95%! Notably, as the TipRanks screenshot shows, all the analysts covering the stock are bullish right now:
2. Concert Pharmaceuticals
Yang’s number 2 stock pick is Concert Pharmaceuticals (CNCE– Research Report). This groundbreaking biotech improves already approved drugs. By selectively replacing hydrogen atoms with deuterium, CNCE can create new compounds with better efficacy, safety and tolerability profiles.
And because Concert’s new chemical entities are versions of existing and validated drugs, they are expected to have a high probability of clinical success with early clinical proof-of-concept.
“With two wholly owned assets, one partnered program and cash value at ~$7/share, we see strong value in CNCE” says Yang, adding “we believe CTP-543 has potential to be first-to-market for the treatment of alopecia areata.”
With a $26 price target on CNCE, the analyst is forecasting upside potential of 78%. Interestingly, that’s exactly the same price target published by the only other analyst covering the stock- top-rated JMP Securities’ Liisa Bayko.
3. Nightstar Therapeutics
Nightstar Therapeutics (NITE– Research Report) is a top-rated biotech set to soar, says the Street. The company is focused on developing on-time gene therapies for patients with rare inherited retinal diseases.
“Nightstar is one of our top picks in 2019” states Yang. She sees strong potential for shares, writing “At ~$14/share, we believe limited credit is being given to NITE’s XLRP program (the company’s second gene therapy program).”
That’s reflected in the analyst’s price target of $22, indicating 55% upside potential from current levels. In fact, the Street is even more bullish with an average price target of $28 (99% upside potential).
“We expect the most important catalyst in mid-2019, with data from the Phase 2/3 expansion study in XLRP” advises Yang. She believes downside risk appears limited given positive data so far and alignment with FDA guidance on trial design.
4. Nektar Therapeutics
Cancer treatment specialist Nektar Therapeutics (NKTR– Research Report) is developing promising immuno-oncology compounds including NKTR-214 (with Bristol Myers’ Opdivo).
“With a broad clinical development program across many indications, we believe Nektar has many shots on goal” Yang tells investors. Indeed, a broad phase 3 clinical program across more than 20 indications in 9 tumor types is now underway.
Most recently, on February 11, the company reported data on bladder cancer that exceeded expectaions. An ORR (overall objective response rate) of 48% was achieved across 23 efficacy evaluable patients.
Following the data release, Yang reiterated her buy rating with an $81 price target (88% upside potential). As we can see this ‘Strong Buy’ stock boasts an average price target of $83- 93% upside potential from current levels.
5. Revance Therapeutics
We all know about Botox. But there could soon be a new kid on the block. Revance Therapeutics (RVNC– Research Report) is developing RT002, long-duration botulinumtoxinA for both aesthetic and medical purposes.
“We believe RT002 has potential to capture significant market share from the current market leader (Botox)” states Yang.
Back in Dec. 2017, Revance presented positive data from RT002 in glabellar lines, showing enhanced duration vs. Botox. Now a BLA (biologics license application) submission for RT002 in glabellar lines is expected in 1H19 with a potential product launch in mid-2020.
Plus, on the aesthetics side, Revance plans to start studies in forehead lines (1Q19) and crow’s feet (mid 2019) with data potentially available in 1H20.
In lieu of these coming catalysts, Yang gives a $37 price target on RVNC- suggesting 88% upside potential lies ahead.
Enjoy the Research Report on the Stocks in this Article:
Aerie Pharmaceuticals (AERI) Research Report
Concert Pharmaceuticals (CNCE) Research Report
Nektar Therapeutics (NKTR) Research Report
Nightstar Therapeutics (NITE) Research Report
Revance Therapeutics (RVNC) Research Report
So we have looked at Difei Yang’s top picks. But TipRanks covers thousands of analysts- and all their latest ratings. Looking for fresh investing inspiration? The Analysts’ Top Stocks tool reveals which ‘Strong Buy’ stocks analysts have a very bullish consensus on right now. Go to the Analysts’ Top Stocks Tool now.
