Why do you want to consider biotech stocks? Simply, the narrative comes down to numbers and a possible rotation.
First, the hard data supports bullishness in biotech stocks. According to Grand View Research, the underlying global industry reached a valuation of $1.55 trillion last year. Moving forward, experts project that the sector will expand at a compound annual growth rate (CAGR) of 13.96% from 2024 to 2030. At the culmination point, the space may be worth $3.88 trillion.
Second, a sector rotation may be underway. Yes, artificial intelligence remains a hot topic. However, after a blistering run among several AI-related enterprises, last week showed a possible slowing of momentum. However, traders might not be ready to call it a day. Rather, they’d be looking for new opportunities.
What could be better than technology designed to help people? Below are biotech stocks to consider.
Bio-Techne (TECH)
Based in Minneapolis, Minnesota, Bio-Techne (NASDAQ:TECH) develops, manufactures and sells life science reagents, instruments and services for the research, diagnostic and bioprocessing markets. While not exactly a pure-play example among biotech stocks, Bio-Techne represents an important cog in the overall ecosystem. Since the start of the year, TECH slipped 5%.
Part of the problem is that the company’s recent financial performances have been lackluster. In the third quarter of last year, Bio-Techne posted earnings per share of 41 cents, missing the 43-cent target. For Q4, it posted an EPS of 40 cents, below the 41-cent estimate. Further, for the current fiscal year, analysts see sales only reaching $1.15 billion, just 1% higher from 2023’s result.
However, in 2025, they anticipate revenue of $1.25 billion. If so, that would represent almost 9% year-over-year growth. Still, if the anticipated sector rotation occurs early, there’s no reason why TECH shouldn’t rise sooner.
Covering experts rate TECH stock a consensus strong buy with an $81.50 price target.
Centessa Pharmaceuticals (CNTA)
Based in the U.K., Centessa Pharmaceuticals (NASDAQ:CNTA) discovers, develops, and delivers medicines to patients. Specifically, it focuses on an activated protein C inhibitor for the treatment of hemophilia A and B. As well, it’s working on an orally administered drug for the treatment of narcolepsy type 1 (NT1). Since the start of the year, CNTA gained almost 34%.
Part of the investment thesis for Centessa centers on its momentum. Over the past 52 weeks, shares gained nearly 169% of equity value. Basically, the company is attempting to recover from a disappointing public market debut back in 2021.
Notably, Centessa has been mitigating expected per-share losses. In Q2, the red ink came out to 26 cents per share, better than the expected 49-cent loss. And in Q3, the company disclosed a loss per share of 40 cents, better than the anticipated 52-cent loss. Management will release its Q4 results on March 28.
Currently, covering experts peg CNTA a unanimous strong buy with a $13.33 price target. Again, it could be one of the biotech stocks to consider as a momentum trade.
Madrigal Pharmaceuticals (MDGL)
Based in West Conshohocken, Pennsylvania, Madrigal Pharmaceuticals (NASDAQ:MDGL) is a clinical-stage biopharmaceutical enterprise focused on the development of therapeutics for the treatment of non-alcoholic steatohepatitis (NASH) in the U.S. Its lead product candidate is resmetirom, a liver-directed thyroid hormone receptor beta agonist, which is in Phase 3 clinical trials for treating NASH.
As with a few other biotech stocks, MDGL is on the move. Since the January opener, shares gained more than 19%. Essentially, anticipation is running hot that the company could start moving into its growth phase. For the current fiscal year, analysts anticipate that sales could hit $97.04 million on average. Further, the high-side estimate calls for $155.63 million.
Even better, for 2025, they believe $348.93 million is a realistic consensus target for the top line. If so, we’re talking about YOY growth of nearly 260%. Further, the high-side 2025 estimate anticipates sales of $531.6 million.
Covering experts rate MDGL a consensus strong buy with a $369.25 average price target.
Cytokinetics (CYTK)
Headquartered in South San Francisco, California, Cytokinetics (NASDAQ:CYTK) is a late-stage biopharma focusing on discovering, developing, and commercializing muscle activators and inhibitors as potential treatments for debilitating diseases. Per its public profile, the company develops small-molecule drug candidates primarily engineered to impact muscle function and contractility. However, CYTK stock is risky, losing almost 23% of equity value since the start of the year.
Part of the reason for the red ink centers on recent poor earnings performances. For example, in Q4 of last year, the company posted a loss per share of $1.38. However, analysts were anticipating only a loss of 97 cents. It was the same story in Q3, where the loss per share was $1.35 against an expected loss of 74 cents.
However, the current year could be a pivot point. Per the high-side estimate, the company could generate sales of $45.43 million. And on average, analysts believe that in 2025, revenue could be $145.29 million. For context, 2023’s top line was only $7.53 million.
Over the next 12 months, covering experts forecast shares reaching $94.63. If so, CYTK is one of the names to consider among biotech stocks.
Catalyst Pharmaceuticals (CPRX)
Founded in 2002, Catalyst Pharmaceuticals (NASDAQ:CPRX) is a commercial-stage biopharma focusing on developing and commercializing therapies for people with rare debilitating, chronic neuromuscular and neurological diseases. Per its corporate profile, Catalyst offers Firdapse, an amifampridine phosphate tablet for the treatment of patients with the Lambert-Eaton myasthenic syndrome (LEMS). It also offers Ruzurgi for the treatment of pediatric LEMS patients.
Since the start of the year, CPRX stock slipped almost 23%. However, near-term momentum suggests a possible turnaround. Some of the struggles are tied to lackluster earnings performances. From Q1 through Q3 of last year, the average negative earnings surprise came out to 10.23%. That’s obviously not great. However, in Q4, the company posted EPS of 31 cents, beating the consensus target of 26 cents.
For the current fiscal year, analysts believe sales of $463.9 million are on tap. If so, that would handily beat last year’s haul of $398.2 million. Further, 2025 revenue could be $561.32 million, representing 21% YOY growth.
CPRX enjoys a unanimous strong buy rating with an average price target of $25.51.
Iovance Biotherapeutics (IOVA)
Incorporated in 2007, Iovance Biotherapeutics (NASDAQ:IOVA) develops and commercializes cell therapies using autologous tumor-infiltrating lymphocytes for the treatment of metastatic melanoma and other solid tumor cancers. Per its public profile, Iovance offers Amtagvi, a tumor-derived autologous T-cell immunotherapy used to treat adult patients with unresectable or metastatic melanoma.
IOVA happens to be one of the top movers in biotech stocks recently. Since the start of the year, shares gained nearly 72%. Over the past 52 weeks, they more than doubled in value. At first, it seems a curious development. In the first half of 2023, Iovance posted an average positive earnings surprise of nearly 37%. In the second half, the company missed the bottom-line marks.
However, experts believe that in 2024, Iovance will ring up $162.27 million on the top line. And in 2025, this figure could expand to $418.63 million. For context, last year’s sales was a measly $1.19 million.
Perhaps best of all, IOVA enjoys a strong buy unanimous view. The average price target stands at $26.09, making it one of the intriguing biotech stocks to consider.
Silence Therapeutics (SLN)
Incorporated in 1994 and based in the U.K., Silence Therapeutics (NASDAQ:SLN) focuses on the discovery and development of novel ribonucleic acid (RNA) therapeutics in hematology, cardiovascular, and other rare and metabolic indications. Per its profile, Silence specializes in its mRNAi GOLD GalNAc Oligonucleotide Discovery platform, which is used to target specific disease-associated genes in the liver.
In addition, its specialized RNA molecules harness the body’s natural mechanism of RNA interference, degrading mRNA molecules that encode specific targeted disease-associated proteins in a cell. Specifically, the company is developing SLN360, which is in Phase 2 trials targeting the reduction of excessive levels of lipoprotein.
It’s not a profitable enterprise so it ranks among the riskier biotech stocks. However, it’s been on a consecutive sales expansion trend since 2019. Currently, its three-year revenue growth rate stands at 47.5%.
Finally, covering analysts rate SLN a unanimous strong buy with an average price target of $57.25. That implies growth of almost 151%. What’s more, the high-side target seeks a price of $75.
On the date of publication, Josh Enomoto did not have (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.
