We recently compiled a list of the 10 Best Biotech Penny Stocks to Buy Now. In this article, we are going to take a look at where Applied Therapeutics, Inc. (NASDAQ:APLT) stands against the other biotech penny stocks.
Biotech Stocks in 2024: Growth Prospects, Key Players, and Investment Opportunities
In 2024, the healthcare industry has been doing well, encouraging investors to look into new and exciting opportunities. Particularly biotech is anticipated to profit, despite the dangers of continuous mergers and acquisitions. Traders ought to exercise caution. With an 11.8% CAGR, the worldwide biotechnology market is expected to reach USD 4.25 trillion by 2033. It is expanding quickly. The U.S. market is projected to increase at an 11.90% CAGR to reach USD 763.82 billion by 2033 from its 2023 valuation of USD 246.18 billion. In 2023, the U.S. led North America in terms of revenue share.
Fitch Ratings maintains a Neutral outlook for the global biotech industry in 2024. Its primary motivation to do so is the moderating inflationary rates. The industry is supported by factors such as a growing aging population, increased healthcare access, and a rise in chronic and specialist conditions. Fitch also forecasts a heightened focus on drug pricing and patient value.
Biotech equities including Vincerx Pharma (VINC), Corbus Pharmaceuticals (CRBP), and Viking Therapeutics (VKTX) have seen significant gains in 2024, with returns ranging from 134% to 446%, despite receiving less media attention than industries like technology and cryptocurrencies. Positive weight loss drug trial findings, for example, let Viking Therapeutics connect its product with a potentially billion-dollar market need. Although the success of individual stocks indicates prospective gains, larger indexes such as the NASDAQ Biotechnology PR USD Index reveal the volatility of the industry; it fell 11% between 2022 and 2023 as a result of economic difficulties but gained 3% by February 2024.
Investors eyeing biotech stocks may wonder which areas are prone to buyouts. Laura Chico identified key areas to watch for potential buyouts:
“Obesity has been a really big theme in 2023, and will probably continue for the foreseeable future, but across the area, at least in these recent M&A transactions, it's been really broad-based, and I think that's really a testament to the innovation in the space. We have several deals in oncology, immunology, inflammation, neuro, and even rare diseases. So it's not just within certain verticals at this point.”
Chico advises biotech investors to monitor FDA approval news, scientific and clinical risks, and the disease categories that companies are targeting since these might provide indicators of company success. On March 6, Healthcare Equity Strategist Jared Holz talked about this possibility on CNBC's "The Exchange”:
"[Biotech] has been one of the worst spaces in all of the equity market since mid-2021. We've barely seen any positive activity for any pronounced period until very recently... When you consider the risk factors, concerning drug prices and other elements of the business... all these risk factors are much more well understood and we can continue to move higher from here."
Holz emphasizes the potential in well-positioned small-cap choices and says it's not too late to invest in large-cap biotech equities. We've put up a list of oversold biotech stocks, which includes excellent choices under $20 as well as cheap options that have been missed.
Our Methodology
To rank the best biotech penny stocks to buy now, we first identified large biotech companies priced under $5. We then selected the top 10 and ranked them based on the number of hedge fund holders in Q1 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A researcher in a lab coat holding up a test tube filled with a glowing green liquid, symbolizing the clinical-stage biopharmaceutical company's research into cardiovascular disease treatments.
Applied Therapeutics, Inc. (NASDAQ:APLT) tops the list for being the best biotech stock to buy now and focuses on developing novel therapies for rare central nervous system diseases and diabetic complications. Applied Therapeutics has made significant strides in its drug development pipeline, particularly with its lead candidate AT-007. The company recently reported stellar results from a phase 2 study, which has generated considerable excitement among investors. This positive outcome has positioned Applied Therapeutics as one of the top biotech stocks to watch in the current market.
Based on research conducted over the last three months by three Wall Street analysts, Applied Therapeutics is rated as a Strong Buy. With a high estimate of $14.00 and a low estimate of $11.00, the average 12-month price goal is $12.33. This implies that its current market price of $4.60 may see a gain of up to 168.04%. In Q1 2024, 30 hedge fund holders held positions in the company, up from 25 in the previous quarter. Perceptive Advisors held the largest position in the company with 8,005,000 shares worth $54,434,000, comprising 0.94% of the company’s total portfolio.
As of March 31, 2024, Applied Therapeutics, Inc. (NASDAQ:APLT) reported cash, cash equivalents, and short-term investments of $146.5 million which is a significant increase from $49.9 million at the end of 2023. Research and development expenses for Q1 2024 totaled $12.2 million, down from $15.9 million in Q1 2023 which is primarily due to reduced costs related to CROs and drug manufacturing, partially offset by higher regulatory and personnel expenses. The company reported a net loss of $83.9 million, or $0.67 per share, for Q1 2024, compared to a net loss of $10.1 million, or $0.18 per share, in Q1 2023.
Overall APLT ranks 1st on our list of the best biotech penny stocks to buy. You can visit 10 Best Biotech Penny Stocks to Buy Nowto see the other biotech penny stocks that are on hedge funds’ radar. While we acknowledge the potential of APLT as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than APLT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
