Although investing in biotech stocks can be a risky endeavor thanks to the fact that these companies face tons of regulatory hurdles, oftentimes the rewards will outweigh the potential downside. A single news headline can send the price of these stocks skyrocketing or plummeting, which is why it’s important to extensively research the companies you are considering before adding them to your portfolio. With that said, biotech stocks are in the spotlight right now thanks to a worldwide focus on public health.
The best biotech companies offer a nice balance between several established drugs bringing the company consistent income along with a robust pipeline of potential blockbuster drugs. However, investing in emerging biotech companies can also pay off in a big way if you can stomach the volatility. Keep reading on to learn about 3 biotech stocks to watch in December. These stocks are worth a look for investors that want to add biotech companies with significant long-term upside. Let’s take a deeper look below.
The first stock on our list is Amgen, a leading biotech company that produces major treatments for illnesses such as anemia, cancer, osteoporosis, neutropenia, and rheumatoid arthritis. Amgen shareholders have endured a volatile 2020 and the stock is down around 6% year-to-date, which means that investors can add shares of one of the largest biotechnology companies in the world at a very reasonable valuation. The stock also offers a 2.84% dividend yield for some added income and has raised its dividend for 9 consecutive years.
This is a biotech company with a lot of upside going forward, largely due to the company’s Q4 2019 acquisition of Otezla, a leading medication used to treat psoriasis. Amgen has a strong pipeline and there’s also a lot to like about Amgen’s biosimilars business, which could be a big growth driver for the company over the long term. Biosimilars are interesting because they offer a type of biologic therapy that works very similarly to an original biologic treatment but at a lower cost. Companies like Amgen create biosimilars with the idea that they can sell an effective treatment at a lower cost once it is approved by the FDA. Amgen’s biosimilars sales grew 176% year-over-year in Q2 to $478 million, which is certainly a positive development for investors to consider.
Next, we have Sanofi, a French biotech company that offers a wide range of prescription pharmaceuticals and vaccines. Ever since CEO Paul Hudson took over in September 2019, the company has been making smart acquisitions and shifting its strategy to focus more on growth drivers. One of the company’s notable drugs, Dupixent, has the potential to become a blockbuster. It’s the first biologic medicine for children aged 6 to 11 years with moderate-to-severe atopic dermatitis. Sales for the drug increased by 68.6% year-over-year in Q3 and the company estimates it could bring in $12 billion in annual sales for the company at some point.
The stock offers investors a strong 3.34% dividend yield and the company generates strong free cash flows thanks to its wide lineup of drugs and vaccines. Sanofi also has two COVID-19 vaccine candidates, which could start the all-important phase 3 trial by the end of the year. The bottom line here is that Sanofi is an intriguing biopharmaceutical stock with a wide economic moat that could end up being a bargain at its current price.
One of the most attractive qualities of investing in biotech companies is that you are providing capital to businesses that are working to create treatments, medicines, and techniques that can potentially eradicate some of the most serious health issues that humans face. Take Crispr Therapeutics, for example. It’s a company that is focused on using an advanced form of gene editing to cure genetic disorders. The company’s founder, 2020 Nobel Prize Winner in Chemistry Emmanuelle Charpentier, helped to discover the advanced CRISPR technology that allows for precise genetic engineering that can potentially cure genetic disorders afflicting millions of people across the globe.
Crispr Therapeutics has already created a treatment for sickle cell disease and has three anti-cancer compounds that are in early-stage studies. With that said, this is an early-stage company that will likely experience significant volatility over the years. Consider this biotech stock to be a high-risk investment that could become a massive winner. The stock is up over 118% year-to-date and has the potential to finish the year strong after its latest breakout.
Before you consider Amgen, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Amgen wasn't on the list.
While Amgen currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.
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