Last year was a tough one for biotech stocks. The Securities and Exchange Commission reported 41 bankruptcies following the Fed’s interest rate hiking cycle, making it difficult to finance debt.
Yet, by the end of the year, the biotech sector started to recover. Over one year, BlackRock’s iShares Biotechnology ETF (NASDAQ:IBB) is now up 10%, but down -1.3% year-to-date. Due to negative market sentiment, some biotech stocks are more discounted than others.
But which biotech stocks have sounder fundamentals?
CRISPR Therapeutics (CRSP)
CRISPR (NASDAQ:CRSP), which stands for Clustered Regularly Interspaced Short Palindromic Repeats is a gene-editing tool adapted from bacterial defense to apply as molecular scissors.
By cutting DNA fragments at certain points, CRISPR tech can potentially correct faulty genes and eliminate conditions stemming from them. In January, the company announced the FDA approval of gene-edited cell therapy CASGEVY for treating patients who require regular blood transfusions to stay alive.
For 2024, CRISPR Therapeutics plans to advance clinical trials across oncology, diabetes, cardiovascular and autoimmune disorders. In the full-year 2023 filing, the company reported $260.4 million in net cash used in operating activities compared to $495.7 million the year prior, attributed to Vertex payments.
While the company’s total revenue remained relatively flat at ~$370 million, it had a $153.6 million net loss, a 76% decrease from the net loss in 2022. Overall, CRISPR Therapeutics will not need additional funding for the next two years. Twenty-eight Nasdaq analysts view CRSP’s average price target at $86.22 vs the current $71.61 per share.
Owing to the wide development spectrum of gene-editing therapies, the high estimate for CRSP stock is $199, while the low forecast is $30 per share. Year-to-date, CRSP stock is up 8.4%.
Moderna (MRNA)
Moderna (NASDAQ:MRNA) is one of the biotech stocks that was tightly wound up during the C19 vaccines rollout. Within the last year, the aptly-named MRNA stock has been down 28% but only 6.3% year-to-date, suggesting a rally from the bottom. Although tied with Pfizer for the vaccine rollout, it is yet to be shown that government-granted immunity will be torn down.
Much is expected of Moderna’s cancer vaccines outside of respiratory infections, using the tweaked mRNA delivery for the immune response to fight cancer cells. In the last few decades, there has been a significantly higher uptick of cancer in adults younger than 50.
Learning from the scaled-up response to C19 in 2021, Moderna will likely be a key player in this response, making it one of the biotech stocks to watch for. In the latest Q4 2023 filing, Moderna reported a net loss of $4.7 billion for the full year vs the $8.4 billion net income in 2022.
Yet, the company surprised investors in Q4 by reporting positive $0.55 earnings per share (EPS) vs expected negative $0.78. With the launch of RSV vaccines for the elderly and cancer mRNA deployment in the future, 21 analysts polled by Nasdaq place the average MRNA price target at $129.27 vs the current $105.
This is the case with all biotech stocks. The range for highs and lows is high owing to uncertain development and approvals. The high estimate for MRNA shares is $310, while the low estimate is $61 per share.
Bio-Techne (TECH)
Bio-Techne (NASDAQ:TECH) broke even on a one-year timetable at -1.3% returns but is down -6.8% year-to-date similar to MRNA. The company is a global supplier of high-precision diagnostics, clinical products, reagents, and analytical instruments used throughout the biotech sector.
In other words, Bio-Techne is for the biotech stocks that Taiwan Semiconductor Manufacturing (NYSE:TSM) is for companies like Nvidia (NASDAQ:NVDA) and AMD (NASDAQ:AMD). Last Friday, the company gained EU IVDR certification for its latest leukemia diagnostics. Previously, in 2022, Forbes listed Bio-Techne on the Best Employers for Diversity list, signaling compliance with the ESG framework.
In the latest Q2 FY24 earnings, Bio-Techne reported $272.6 million in net sales, with an organic revenue decline of 2% YoY. Of the last four quarters, the company beat EPS estimates only in Q2 ‘23. However, with an 18% increase in operations cash flow at $142.5 million, Bio-Techne is well positioned to carry the biotech revival.
Based on 12 analyst insights pulled by Nasdaq, the average TECH price target is $81.5 vs the current $71.50. Because Bio-Techne is a stable biotech company, the high estimate is $95, while the low forecast is $65 per share.
On the date of publication, Shane Neagle 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.
