7 Biotech Stocks to Buy for Their Game-Changing Potential
With the market struggling amid rising recession fears, now may be the ideal time to consider biotech stocks. First, the sector itself is a financially lucrative one. Last year, the ecosystem reached a valuation of $1.55 trillion. Between 2024 to 2030, the segment could expand at a compound annual growth rate (CAGR) of 13.96% to $3.88 trillion.
Along this line of thinking, the current market fallout makes biotech stocks all the more intriguing. No matter what, society will always push for solutions that address the human condition. From cancer to autoimmune diseases and other conditions and ailments, the search for effective treatments is a perpetual one. Not only that, a healthy society is an economically productive and efficient one.
Therefore, it’s no surprise that government support and incentives underline various biotech-related initiatives. It’s in all of our best interests to promote overall wellness. And in that sense, the narrative is recession resistant. With that in mind, below are biotech stocks you can now pick up on a relative discount.
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Crispr Therapeutics (CRSP)
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One of the most groundbreaking innovators among biotech stocks, Crispr Therapeutics (NASDAQ:CRSP) specializes in gene-editing therapies. Primarily, the company’s CRISPR/Cas9 platform – a genome-editing technology that allows scientists to precisely alter DNA – may have the potential to cure various genetic disorders. Crispr aims to do so by essentially fixing faulty genes.
While CRSP stock is certainly enticing, its main challenge is profitability (or lack thereof). In the past year since the second quarter, Crispr posted an average loss per share of 81 cents. Now, in Q4 of last year, it posted earnings per share of $1.10, beating the expected loss of 7 cents. That demonstrates that Crispr has potential – it just needs to demonstrate this more often.
Right now, it’s not the most attractively priced security, trading hands at 14.7x trailing-year sales. In contrast, the biotech sector’s average revenue multiple sits at 6.23x. Still, in the past year, CRSP’s average price-to-sales ratio stood at 27.09.
After a potentially rough outing in fiscal 2024, the following year could see sales rise to $332.54 million, with a blistering high-side estimate of $3.31 billion.
Voyager Therapeutics (VYGR)
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Focused on the development of gene therapies for severe neurological diseases, Voyager Therapeutics (NASDAQ:VYGR) represents one of the top biotech stocks to consider. Its lead candidate is VY-TAU01, which is an anti-tau antibody program for the treatment of Alzheimer’s disease. In its pipeline, it also features a gene therapy that addresses amyotrophic lateral sclerosis or ALS.
As with other biotech stocks, Voyager has trouble with generating consistent profitability. True, in Q4, the company posted EPS of $1.25. This dramatically exceeded the consensus target calling for a loss of 29 cents per share. However, the company has struggled in other quarters to print positive results. That also didn’t change with the latest Q2 results.
At the moment, VYGR stock trades hands at 3.23x sales. While that seems undervalued, it’s a deceptive figure since analysts are projecting that by the end of this year, sales may land at $48.51 million. If so, that would imply an 80.6% drop from last year’s tally of $250.01 million.
However, because of the demand for treatment solutions for neurological diseases, VYGR stock is worth keeping on your watchlist.
Sarepta Therapeutics (SRPT)
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A specialist in the field of precision genetic medicine, Sarepta Therapeutics (NASDAQ:SRPT) focuses on rare neuromuscular diseases. In particular, its RNA-targeted therapies and gene therapies provide hope for patients suffering from conditions such as Duchenne muscular dystrophy. While SPRT stock has been a strong performer this year, the market fallout has negatively impacted the company’s valuation.
Curretnly, SRPT stock trades hands at 9.53x sales. That’s a modest discount compared to the prior year’s average multiple of 9.57x. Further, it’s elevated compared to the industry average. However, it’s worth pointing out that in fiscal 2024, analysts project sales to hit $2.02 billion. If so, this figure would represent a 62.6% lift from the prior year’s haul of $1.24 billion. In addition, the high-side estimate calls for $2.32 billion.
Assuming a shares outstanding count of 94.52 million, SRPT is currently trading at around 5.73x projected high-side revenue. It’s more than possible that Sarepta could hit that target considering that in fiscal 2025, the consensus view for sales calls for $3.27 billion. With so much excitement built into this space, SRPT ranks among the biotech stocks to buy.
Regenxbio (RGNX)
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Another gene-therapy focused enterprise, Regenxbio (NASDAQ:RGNX) is a clinical-stage biotech that utilizes a proprietary platform called NAV Technology. This platform enables Regenxbio to develop advanced therapeutic candidates for vexing conditions such as wet age-related macular degeneration, diabetic retinopathy and other chronic retinal diseases. It also features solutions for other conditions such as muscular dystrophy.
Coming upon a familiar theme among biotech stocks, Regenxbio has trouble with consistent profitability. In the past year since Q2, the company incurred a loss per share of $1.32. That said, analysts anticipated a loss of $1.34 during the same period. Therefore, the biotech managed to post a modest “earnings” surprise of 0.92%.
Right now, RGNX stock trades hands at 6.47x sales. That’s roughly in line with the industry average. However, it’s noticeably lower than the prior year’s average multiple of 7.86x. Analysts see modest growth this year. However, in fiscal 2025, sales could soar to $249.2 million, a far cry from last year’s print of $90.24 million.
Blueprint Medicines (BPMC)
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Another specialist in the field of precision medicine, Blueprint Medicines (NASDAQ:BPMC) focuses on specific groups of cancers and rare diseases. It’s potentially one of the groundbreaking biotech stocks thanks to the underlying targeted approach to cancer treatment. Essentially, Blueprint designs therapeutics based on the specific genetic mutations catalyzing the disease, potentially improving efficacy and reducing complications.
As with other biotech stocks, Blueprint is sporadic in terms of its bottom line. In the past year since Q2, the company posted an average loss per share of 86 cents. In Q1, it managed to deliver EPS of $1.40, far exceeding the expected loss of $1.66. However, investors will eventually want to see more of these positive figures.
Now, BMPC stock is risky, trading hands at 16.06x sales. That’s a screaming hot premium. But to be fair, in the prior year, the average multiple stood at 21.41x. The kicker, though, is the fiscal 2024 forecast. Experts believe that revenue could jump to $491.86 million. If so, that would imply a near doubling from last year’s print of $249.38 million.
Precision BioSciences (DTIL)
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A biotechnology firm focused on the genome editing, Precision BioSciences (NASDAQ:DTIL) utilizes a proprietary platform called ARCUS to develop therapies for genetic diseases and cancer. Theoretically, this unique platform enables Precision to design highly specified genetic modifications. This process can potentially lead to more effective and safer therapies.
Unlike many other biotech stocks in its class, Precision has started to generate consistent profits. In the second half of 2023, the company incurred an average loss per share of $3.08. However, in the first half of this year, the average EPS stands at almost $3.19. In the past four quarters, the average EPS is 5 cents, yielding an earnings surprise of 139.8%.
Enticingly, shares trade hands at only 0.51x sales. What’s more, in the prior year, the market accepted a multiple of 1.1x. Therefore, DTIL stock potentially has room to run. That’s exactly what analysts are anticipating, projecting that fiscal 2024 sales may hit $72.47 million. That’s up 48.7% from last year’s tally of $48.73 million.
Allogene Therapeutics (ALLO)
A clinical-stage immuno-oncology firm, Allogene Therapeutics (NASDAQ:ALLO) develops and commercializes genetically engineered allogeneic T-cell therapies for the treatment of cancer. Specifically, its platform targets pediatric and adult patients suffering from leukemia. According to its website, one of Allogene’s core advantages is its scalable and efficient manufacturing process. This attribute enables potentially lifesaving care at reduced cost, holistically easing the burden of treatment.
Allogene isn’t a profitable enterprise so it will require significant patience – more so than many other biotech stocks. In addition, the company doesn’t generate much in terms of revenue. Last year, the company posted only $95,000 on the top line. What’s worse, by the end of the current year, analysts believe that sales could dip to $50,000.
So, why bother with ALLO stock? Aside from the groundbreaking treatment potential, covering experts believe that by fiscal 2025, revenue could soar to $4.1 million. Further, the high-side estimate calls for $60.97 million.
Interestingly, assuming a shares outstanding count of 208.78 million, ALLO stock is trading at 8.53x projected high-side 2025 revenue. That’s not bad considering the therapeutic potential.
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.
On the date of publication, the responsible editor held a LONG position in CRSP.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.
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