Biotech stocks are often at the forefront of innovation. These are the companies we hear about that are driving breakthroughs in healthcare. Essentially, they are responsible for improving current treatments by placing a large portion of their earnings back into research. Many people imagine these companies as quite risky, as a result, since many don’t have proven earnings. However, because of the large amount of spending back into the business, they offer explosive growth. With AI being all we practically hear about now, biotech stocks are still companies we should consider. They are more than worth considering to add to any investors’ portfolios with their growth potential.
However, many investors don’t have the time to research to find great biotech companies. As such, in this article, we will provide you with three biotech stocks with Strong Buy ratings from Wall Street analysts that investors should consider.
Alkermes (ALKS)
Alkermes (NASDAQ:ALKS) develops pharmaceutical products. Its main focus is on neuroscience and oncology. The stock is up over 10% in the past year with an average Yahoo! Finance one-year average price target of $34.73.
The company had a great year of growth in the Q4. Adding on to this, it anticipates lower expenses in 2024 due to the separation of its oncology business. Another favorable sign for investors is that the company initiated a share buyback program worth up to $400 million over the next few years. The company’s forward price-to-sales ratio of 3.32x is over 16% below the sector average of 3.96x. That indicates the company will likely be relatively undervalued compared to its competitors. With its favorable growth prospects and attractive valuation, the company is worth consideration.
Fortrea Holdings (FTRE)
Fortrea Holdings (NASDAQ:FTRE) is a global contract research organization that engages primarily with biopharmaceutical products and medical device services. Yahoo! Finance analysts estimate the stock will trade within a one-year price range of $29.00 to $40.00, with an average of $36.00.
Looking at its core addressable market, Fortrea Holdings has a huge trillion-dollar R&D market to tap into. Despite concerns about finances earlier in the year, FTRE’s most recent investor presentation shows optimistic signs. Already, the demand for Fortrea’s services is normalizing with improved bookings and pipelines. With its continued focus on project delivery and operational excellence, Fortrea positions itself as an interesting biotech pick on the rise.
Following a Q3 expectation beat and strong Q4 earnings, Fortrea proved a revenue surprise by $27.50 million and an $0.08 EPS beat. With its gross margins stabilizing at around 18% and its price-to-sales ratio sitting at an undervalued 1.02x, Fortrea should remain on all investors’ radar as a potential long-term biotech play.
Arcturus Therapeutics Holdings (ARCT)
Arcturus Therapeutics Holdings (NASDAQ:ARCT) is a late-stage clinical mRNA medicine and vaccine company. The company is currently focusing on developing treatments for rare liver and respiratory diseases for significant growth opportunities. Yahoo! Finance analysts estimate this stock will trade within a one-year price range of $18.00 to $140.00, with an average of $65.25.
While still relatively small, the RNA analysis market is expected to reach a valuation of around $18 billion by 2028. Additionally, ARCT has recently made exciting plans to expand with cystic fibrosis and COVID-19 treatment collaborations. One example is their recent partnership with CSL Limited. That partnership intends to grow ARCT’s addressable market through commercializing self-amplifying mRNA vaccines.
As for Arcturus’s financials, the stock’s TTM EV/EBIT ratio is sitting at an attractive 10.24x, as compared to its industry median of 13x. With ARCT’s upward-looking revenue curing into the new year, it’s no wonder this stock has risen as one of Wall Street’s favorites.
On the date of publication, Ian Hartana and Vayun Chugh did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
