The biotechnology (biotech) sector was one of the best performing sectors in 2020. Many companies saw their stock prices rise as the race was on for a Covid-19 vaccine.
However, many of these companies were pre-revenue companies. Or they were companies that only had one or two in-market products or therapies. And as the calendar turned to 2021, investors took notice. And what went up quickly went down. And in the case of the biotech sector, it came down hard.
One way to tell is to look at biotech ETFs. One of the most popular ETFs, the VanEck Vectors Biotech ETF (NYSEARCA:BBH) is down more than 15%. So you can imagine what it’s been like for many individual biotech stocks. If you’re a buy-and-hold investor, you’re licking some wounds right about now.
But investors who knew what companies to buy have done well. And many of those names will continue to lead the biotech sector in 2022. In this special presentation, we give investors seven biotech stocks that represent different aspects of this diverse sector. We’re confident there’s something for investors of all risk tolerances.
Quick Links
- Pfizer
- Moderna
- AbbVie
- Amgen
- Editas Medicine
- Cellectis
- Vertex Pharmaceuticals
#1 - Pfizer (NYSE:PFE)
We understand that starting with Pfizer (NYSE:PFE) may be off-putting to some investors. The company is polarizing, to say the least. However, as the omicron variant reminds us, the pandemic may be closer to an end than the beginning, but it still has some chapters to go. That means that Pfizer is likely to continue to generate strong revenue and earnings.
PFE stock is up 42% in 2021 easily outpacing the S&P 500 and to be fair the consensus price target of analysts tracked by MarketBeat shows the stock trading has peaked. However, the company released its last earnings report prior to the discovery of the omnicron variant. Since then, the stock has received several raised price targets from analysts.
And this bullish view is supported by Dan Ushman, CEO and Founder of the technical analysis software firm TrendSpider who believes PFE stock is displaying a strong technical outlook. In a research note, Ushman noted that PFE stock recently broke through a level of resistance and is now trading at an all-time high. Ushman believes that Pfizer may retest recent lows, but if it can stay above those levels it could break out to the upside.
About Pfizer
Pfizer Inc discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products in the United States, Europe, and internationally. The company offers medicines and vaccines in various therapeutic areas, including cardiovascular metabolic, migraine, and women's health under the Eliquis, Nurtec ODT/Vydura, Zavzpret, and the Premarin family brands; infectious diseases with unmet medical needs under the Prevnar family, Abrysvo, Nimenrix, FSME/IMMUN-TicoVac, and Trumenba brands; and COVID-19 prevention and treatment, and potential future mRNA and antiviral products under the Comirnaty and Paxlovid brands.
Read More - Current Price
- $30.77
- Consensus Rating
- Hold
- Ratings Breakdown
- 5 Buy Ratings, 8 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $34.50 (12.1% Upside)
#2 - Moderna (NASDAQ:MRNA)
The bullish narrative for Moderna (NASDAQ:MRNA) is nearly identical to that of Pfizer. Whether or not, a curated vaccine will be required to effectively deal with the omicron variant, Moderna is in a position for another strong year.
Where the case for Moderna becomes different and potentially more bullish is when you look beyond the pandemic. The company’s vaccine has been a significant proof of concept for mRNA technology. This means that Moderna may find it easier to get the approval of the technology over a wide spectrum of vaccines. Should that happen, the ceiling for MRNA stock may be much higher than that of Pfizer.
MRNA stock is up 147% for the year (as of this writing) and that’s with the stock being down sharply from its all-time high set earlier this year. That drop occurred after the company missed sharply on both its top and bottom lines when it reported earnings in November.
However, as Ushman points out Moderna’s stock is displaying a very similar movement to Pfizer. And if the company can maintain support above its closest Anchored Volume Weighted Average Price, it is giving investors a strong technical setup.
About Moderna
Moderna, Inc, a biotechnology company, discovers, develops, and commercializes messenger RNA therapeutics and vaccines for the treatment of infectious diseases, immuno-oncology, rare diseases, autoimmune, and cardiovascular diseases in the United States, Europe, and internationally. Its respiratory vaccines include COVID-19, influenza, and respiratory syncytial virus, spikevax, and hMPV/PIV3 vaccines; latent vaccines comprise cytomegalovirus, epstein-barr virus, herpes simplex virus, varicella zoster virus, and human immunodeficiency virus vaccines; public health vaccines consists of Zika, Nipah, Mpox vaccines; and infectious diseases vaccines, such as lyme and norovirus vaccines.
Read More - Current Price
- $122.11
- Consensus Rating
- Hold
- Ratings Breakdown
- 7 Buy Ratings, 9 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $133.88 (9.6% Upside)
#3 - AbbVie (NYSE:ABBV)
If you’re looking for a company that’s delivering market-beating performance without the controversy surrounding vaccine plays, AbbVie (NYSE:ABBV) is an exceptional choice. In addition to having several established drugs, like Humira, the company has a robust pipeline that gives investors reason to believe the company will continue to deliver strong revenue and earnings even when Humira faces generic competition in the United States.
Another reason to look at AbbVie is as a hedge against inflation. The company offers an exceptionally reliable dividend as evidenced by its inclusion in the elite Dividend Aristocrat club. This means it has increased its dividend for at least the last 25 years. In the case of AbbVie, the number is 49 years which puts it one year away from being a Dividend King.
That being said, ABBV stock is at or near an all-time high. And some investors may wonder how much upside is left. The analysts tracked by MarketBeat do give the stock a slightly higher price. The stock looks to be trying to find support just below its all-time high. If it’s successful, investors may be looking at another leg higher.
About AbbVie
AbbVie Inc discovers, develops, manufactures, and sells pharmaceuticals worldwide. The company offers Humira, an injection for autoimmune and intestinal Behçet's diseases, and pyoderma gangrenosum; Skyrizi to treat moderate to severe plaque psoriasis, psoriatic disease, and Crohn's disease; Rinvoq to treat rheumatoid and psoriatic arthritis, ankylosing spondylitis, atopic dermatitis, axial spondyloarthropathy, ulcerative colitis, and Crohn's disease; Imbruvica for the treatment of adult patients with blood cancers; Epkinly to treat lymphoma; Elahere to treat cancer; and Venclexta/Venclyxto to treat blood cancers.
Read More - Current Price
- $185.24
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 13 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $188.71 (1.9% Upside)
#4 - Amgen (NASDAQ:AMGN)
The next stock on our list has a similar story to AbbVie. That is, Amgen (NASDAQ:AMGN) has several high-revenue generating products in the market. Some of the most common names are Enbrel to treat plaque psoriasis, rheumatoid arthritis, and psoriatic arthritis; Neulasta which reduces the chance of infection for cancer patients; and Otezla which is also used to treat plaque psoriasis and psoriatic arthritis.
Although AMGN doesn’t have as attractive of a technical setup at the moment, the stock does appear to be forming a level of support of around $197. If that proves to be the case, then investors may have reason to believe the analyst's forecast for a price target of around $230 will be accurate. And in the meantime, Amgen is offering an attractive dividend for sticking around. The company currently pays out $7.04 on an annual basis and the company has increased its dividend in each of the last 10 years.
About Amgen
Amgen Inc discovers, develops, manufactures, and delivers human therapeutics worldwide. The company's principal products include Enbrel to treat plaque psoriasis, rheumatoid arthritis, and psoriatic arthritis; Otezla for the treatment of adult patients with plaque psoriasis, psoriatic arthritis, and oral ulcers associated with Behçet's disease; Prolia to treat postmenopausal women with osteoporosis; XGEVA for skeletal-related events prevention; Repatha, which reduces the risks of myocardial infarction, stroke, and coronary revascularization; Nplate for the treatment of patients with immune thrombocytopenia; KYPROLIS to treat patients with relapsed or refractory multiple myeloma; Aranesp to treat a lower-than-normal number of red blood cells and anemia; EVENITY for the treatment of osteoporosis in postmenopausal for men and women; Vectibix to treat patients with wild-type RAS metastatic colorectal cancer; BLINCYTO for the treatment of patients with acute lymphoblastic leukemia; TEPEZZA to treat thyroid eye disease; and KRYSTEXXA for the treatment of chronic refractory gout.
Read More - Current Price
- $334.85
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 11 Buy Ratings, 10 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $312.63 (6.6% Downside)
#5 - Editas Medicine (NASDAQ:EDIT)
To this point, we’ve focused on biotech stocks that are trading near their all-time highs. Editas Medicine (NASDAQ:EDIT) presents investors with the opposite case. At this time, EDIT stock is trading near its all-time low.
Editas has only been publicly trading since 2016 so there’s not a long history here. And that’s okay because this stock is all about the future, specifically the field of gene editing. Along with many gene-editing stocks, EDIT stock soared to over $90 a share early in 2021 as the sector went into a short-lived bubble.
The price movement since then illustrates the volatility in this nascent field. Editas doesn’t have a product on the market and maybe years away from doing so. That being said, the company appears to have enough cash on hand to get it through 2023. By that time, it may be able to bring one of its therapies to market.
Although the consensus opinion of analysts tracked by MarketBeat gives EDIT stock a Hold rating, it also has a price target with a 95% upside. That aligns nicely with the company’s stock chart which suggests that the stock is oversold which may make it attractive to risk-tolerant investors.
About Editas Medicine
Editas Medicine, Inc, a clinical stage genome editing company, focuses on developing transformative genomic medicines to treat a range of serious diseases. It develops a proprietary gene editing platform based on CRISPR technology. The company develops EDIT-101, which is in Phase 1/2 BRILLIANCE trial for Leber Congenital Amaurosis; and reni-cel, a clinical development gene-edited medicine to treat sickle cell disease and transfusion-dependent beta-thalassemia.
Read More - Current Price
- $5.65
- Consensus Rating
- Hold
- Ratings Breakdown
- 4 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $12.90 (128.3% Upside)
#6 - Cellectis (NASDAQ:CLLS)
For even more risk-tolerant investors, Cellectis (NASDAQ:CLLS) is a biotech stock that is currently trading under $10. Like Editas Medicine, Cellectis is in the field of gene editing. However, whereas Editas uses the CRISPR/Cas9 platform, Cellectis uses a gene-editing technology called TALEN.
The company also specializes in oncology treatments and has six candidates in its pipeline including three wholly-controlled candidates. That being said, CLLS stock is down 68% in 2021 and it’s unclear at this time whether the stock has found a floor.
However, analysts remain very bullish on CLLS stock with a consensus price target of $23.25 which would be a gain of 170% from its current price. And the stock does appear to be gaining interest from institutional investors, which is usually a signal that the stock could be ready to rise.
About Cellectis
Cellectis SA, a clinical stage biotechnological company, develops immuno-oncology products based on gene-edited T-cells that express chimeric antigen receptors to target and eradicate cancer cells. The company is developing UCART19, an allogeneic T-cell product candidate for the treatment of CD19-expressing hematologic malignancies, such as acute lymphoblastic leukemia; ALLO-501 and ALLO-501A to treat relapsed or refractory for non-hodgkin lymphoma (NHL); and ALLO-715 for the treatment of multiple myeloma.
Read More - Current Price
- $2.30
- Consensus Rating
- Buy
- Ratings Breakdown
- 2 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $8.00 (247.8% Upside)
#7 - Vertex Pharmaceuticals (NASDAQ:VRTX)
The last biotech stock on our list is Vertex Pharmaceuticals (NASDAQ:VRTX). Vertex is the industry leader in the treatment of cystic fibrosis with four drug treatments on the market. And investors will appreciate that those treatments are capable of treating 90% of patients with cystic fibrosis. That gives the company a virtual monopoly in a huge addressable market.
In November, Vertex posted its third consecutive earnings report in which it beat both top and bottom-line estimates.
That being said, the stock is down 19% for the year despite being up 10% in the last month. This is creating an interesting dynamic in that VRTX stock is now approximately back to where it was after the market selloff to start the pandemic. This may be an example of investors simply rotating out of the segment and Vertex being caught in the wash.
Analysts give the stock a consensus price target of $255.12 which would give it a 23% upside from its current price.
About Vertex Pharmaceuticals
Vertex Pharmaceuticals Incorporated, a biotechnology company, engages in developing and commercializing therapies for treating cystic fibrosis (CF). It markets TRIKAFTA/KAFTRIO for people with CF with at least one F508del mutation for 2 years of age or older; SYMDEKO/SYMKEVI for people with CF for 6 years of age or older; ORKAMBI for CF patients 1 year or older; and KALYDECO for the treatment of patients with 1 year or older who have CF with ivacaftor.
Read More - Current Price
- $495.26
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 17 Buy Ratings, 6 Hold Ratings, 3 Sell Ratings.
- Consensus Price Target
- $460.30 (7.1% Downside)
The Warren Buffett missive to “be greedy when others are fearful” may not be completely accurate when it comes to biotech stocks. Many stocks in the sector are quality names that deserve a place in portfolios at any time.
However, it does serve as a reminder that the madness of crowds can apply to stocks that are on the way down just as quickly as stocks that are on the way up. That is, sometimes FOMO (Fear Of Missing Out) on the way up turns into simple fear on the way down.
But in that fear, there can be an opportunity. The biotech industry is offering some fascinating potential in the areas of gene editing and gene therapy. For risk-tolerant investors, this is likely to be an area where the strongest gains will be made.
However, there may still be some turbulence before we get there. The stocks in this presentation appear to have strong fundamental and/or technical cases that make them worthy of your consideration.
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