Biotech stocks have long been a speculative, albeit rewarding way to invest in the advancement of medical technology. This industry has a wide range of companies, from start-up firms that are researching their first treatment to pharmaceutical giants that are among the largest and most powerful companies in the world. The goal of all biotech companies is to research and develop a treatment that is approved by the FDA (and other countries’ regulating bodies) and sold to patients around the world.
So what makes the biotech industry an attractive investment opportunity? Savvy investors know that investing in the right biotech stocks can provide their portfolio with exponential gains. Effectively, some biotech stocks will be swing-and-misses, but if you hit enough home runs it won’t matter. The goal is to determine which biotech stocks will become the home runs. We present to you three biotech stocks that we believe are firmly in play in the next five years.
Vertex Pharmaceuticals (VRTX)
Vertex Pharmaceuticals (NASDAQ:VRTX) is an American biopharmaceutical company that is best known for its innovative treatments for cystic fibrosis. 27 Yahoo Finance analysts are currently bullish on the stock with a one-year price range of $325.00 to $578.00 and an average price target of $465.53.
While the company is best known for its cystic fibrosis treatments, there are plenty of other things for investors to be excited about. Vertex partnered with gene-editing specialist CRISPR Therapeutics (NASDAQ:CRSP) to produce the first fully gene-edited CAS9 therapy for sickle-cell disease. The companies have also recieve news of a FDA approval for the treatment known as Casgevy in December.
Vertex has consistently grown its revenues and gross profits each year which is certainly what shareholders like to see. VRTX has a forward P/E ratio of 26.39x and in the most recent quarter recorded a net profit margin of 38.5%. With 16 other treatments in various clinical trial phases that will treat patients with diseases like Huntington’s and Type 1 Diabetes, Vertex only has room to continue blasting up.
Viking Therapeutics (VKTX)
Viking Therapeutics (NASDAQ:VKTX) is a clinical-stage biotechnology firm that focuses its treatments on metabolic disorders. Following the release of Ozempic, global demand for weight loss treatments has exploded, and Yahoo Finance analysts currently have a one-year price range of $28.00 to $51.00 and an average target of $39.33.
So, what’s so intriguing about Viking’s stock? Not only is it one of the few biotech companies that specializes in weight loss, but it is also believed to be one of the top acquisition targets in the industry. So far this year, Viking has been linked to take-over bids by both Eli Lilly (NYSE: LLY) and Pfizer (NYSE:PFE). Many believe that an acquisition of Viking will occur once it reports its Phase-2 results for its obesity drug VK2735 later this quarter.
Viking is what we call a true pre-revenue, clinical-stage biotech company. The firm has zero revenues as of 2024 which makes creating a valuation for the stock a challenge. The true allure of investing in VKTX right now is in hopes of an aggressive buyout offer from a larger pharmaceutical company.
CRISPR Therapeutics (CRSP)
CRISPR Therapeutics is a Swiss-American biotech firm that is based in Zug, Switzerland. This company is best known for its groundbreaking use of gene editing to produce therapies and treatments in areas like regenerative medicine, in-vivo cell editing and immuno-oncology. As one might expect, analyst coverage is all over the map for such a unique company. Yahoo Finance analysts have a one-year price target range of $30.00 to $199.00, and an average price target of $84.96.
As mentioned earlier, the company is making waves in the biotech industry. The FDA recently approved Casgevy, the first-ever CRISPR-based therapy in history. Many in the industry believe this will be a multi-billion dollar revenue stream for the company. One of the biggest bulls on CRISPR is Ark Invest’s Cathie Wood. Throughout its various ETFs, Ark Invest owns about 7.27% of CRISPR’s outstanding shares.
With the approval of Casgevy, CRISPR should see revenue figures steadily rise into the future. The stock isn’t expensive by any means when you compare it to other early-stage biotech firms. It currently has a TTM Price-to-Sales Ratio of 17.98x. This figure should continue to decline as revenue for CRISPR grows over the next few years. As such, CRSP is worth a look for speculative biotech investors with a higher risk appetite and long-term investing horizon.
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.
