While it’s a common conspiracy theory – and comedic punchline – that medical innovators only seek to manage problems rather than cure them, the reality is that several biotech stocks to buy undergird myriad therapeutic advancements. For patients, they represent hope for a positive outcome. And for investors, they may enjoy life-changing profitability while putting their money down for good causes.
According to Grand View Research, the global biotech market size reached an estimated valuation of $1.02 trillion in 2021. Further, experts project that the segment will expand at a compound annual growth rate (CAGR) of 13.9% from 2022 to 2030. By the end of the forecasted period, biotech stocks to buy in total may generate revenue of $3.88 trillion.
On paper, it’s a win-win scenario for patients and investors. Still, this segment can be incredibly volatile. But if you can handle the heat, these biotech stocks to buy may offer a breakthrough for your portfolio.
| LEGN | Legend Biotech | $48.14 |
| CRSP | CRISPR | $45.18 |
| ROIV | Roivant Sciences | $7.69 |
| EDIT | Editas | $7.41 |
| BEAM | Beam Therapeutics | $31.02 |
| RARE | Ultragenyx Pharmaceutical | $39.07 |
| NTLA | Intellia | $37.56 |
Legend Biotech (LEGN)
A global, commercial-stage biotechnology firm, Legend Biotech (NASDAQ:LEGN) develops and manufactures novel therapies. According to its website, Legend is currently researching a broad portfolio of cell therapies to help strengthen patients’ immune systems and fight disease. Notably, the market has overall responded well to LEGN, sending it up nearly 31% in the trailing year.
To be fair, LEGN slipped almost 4% since the beginning of 2023. However, it could be a discount for one of the higher-risk, higher-reward biotech stocks to buy. Financially, the company struggles for traction regarding profitability. For instance, in 2021, the company posted a net loss of $403.58 million. That said, Legend enjoys decent stability in the balance sheet. Most notably, its Altman Z-Score pings at a lofty 9.35, which indicates low bankruptcy risk over the next two years.
Finally, Wall Street analysts love LEGN, pegging it a unanimous strong buy. As well, their average price target stands at $73, implying over 55% upside potential.
CRISPR (CRSP)
One of the well-known (and controversial) advanced biotech stocks to buy, CRISPR (NASDAQ:CRSP) specializes in gene-based medicines. Specifically, it harnesses the power of the gene-editing tool Clustered Regularly Interspaced Short Palindromic Repeats (CRISPR)/Cas9 to promote positive outcomes. It achieves this through the precise cutting of DNA and allowing natural repair mechanisms to take over.
So far this year, investors appear intrigued at CRSP, sending the stock up more than 8%. However, it struggled in the past 365 days, losing over 29% of its equity value. Financially, the underlying company faces severe profitability hurdles, with its operating and net margins falling well below zero. Therefore, it’s an aspirational entity among biotech stocks to buy. However, it does feature decent stability in the balance sheet, with an equity-to-asset ratio of 0.84 (above the sector median of 0.71). Also, its three-year book growth rate pings at 15.6%, outpacing nearly 66% of its rivals.
Lastly, covering analysts peg CRSP as a consensus moderate buy. Their average price target stands at $75.80, implying nearly 71% upside potential.
Roivant Sciences (ROIV)
A healthcare company, Roivant Sciences (NASDAQ:ROIV) focuses on applying technology to drug development. Founded in 2014, the leadership team brought Roivant to life with the goal of developing and delivering medicines to patients faster and more efficiently. To achieve this, the company built a portfolio of over 20 subsidiary enterprises.
Since the January opener, ROIV only managed to pop up less than half a percent. However, in the trailing year, it gained a stratospheric 50% – actually a little bit over at the time of writing. That’s the good news. The not-so-amazing narrative centers on its financials. Here, the balance sheet prints a below-average strength level, with an Altman Z-Score of 0.49 technically indicating distress.
The only positive stems from the company’s gross margin of 78.18%. Other than that, ROIV represents a potshot on its aspirational goals to improve efficiencies in healthcare. However, not all may be lost. Per Wall Street analysts, ROIV represents a unanimous strong buy. Also, their average price target comes out to $13.71, implying 91% upside potential. Thus, if you can handle the heat, ROIV could be one of the biotech stocks to buy.
Editas Medicine (EDIT)
A clinical-stage biotech firm, Editas Medicine (NASDAQ:EDIT) develops therapies for rare diseases based on the aforementioned CRISPR gene-editing technology. According to Grand View Research, the global CRISPR market reached a valuation of $2.05 billion in 2021. By 2030, the sector could command total revenue of $9.6 billion. Therefore, many regard EDIT as one of the exciting biotech stocks to buy.
However, investors must be sure they can handle potential volatility. Since the January opener, EDIT lost nearly 12% of its equity value. In the trailing year, shares tumbled by more than 60%. If that wasn’t bad enough, Gurufocus warns its readers that Editas may be a possible value trap.
If you’re the glass-half-full type, you might notice that EDIT trades at 1.42 times tangible book value. As a discount to this metric, Editas ranks better than 70.19% of other biotech stocks to buy. In closing, analysts peg EDIT as a consensus moderate buy. Moreover, their average price target hits $14.80, implying nearly 99% upside potential.
Beam Therapeutics (BEAM)
Another innovative biotech firm, Beam Therapeutics (NASDAQ:BEAM) conducts research in the field of gene therapies and genome editing. Again, this centers on the modulation of DNA via CRISPR. According to an alternative forecast, BCC Research predicts that by 2027, the global CRISPR technology market should command a valuation of $9.2 billion. Therefore, plenty of optimism focuses on BEAM stock.
That said, it’s yet another high-risk, high-reward example of biotech stocks to buy. Since the January opener, BEAM lost more than 18% of its equity value. In the past 365 days, it dropped over 48%. Needless to say, it’s not for the faint of heart.
Unfortunately, market participants looking at the financials won’t find much comfort there either. As with other aspirational biotech stocks to buy, Beam suffers from negative profit margins. In addition, its Altman Z-Score pings at 1.25, indicating distress. Still, despite the lackluster print, Wall Street analysts peg BEAM as a consensus moderate buy. Their average price target comes out to $62.40, implying over 104% upside potential.
Ultragenyx Pharmaceutical (RARE)
Specializing in the research and development of novel products, Ultragenyx Pharmaceutical (NASDAQ:RARE) focuses on therapeutics to address rare and ultra-rare genetic diseases for which no approved treatments typically exist. Further, Ultragenyx works with multiple drug modalities including biologics, small molecule, and gene therapies, among others. Its disease categories cover bone, endocrine, metabolic, muscle, and central nervous system (CNS) diseases.
Although scientifically compelling, RARE likewise represents a risky (though potentially rewarding) example of biotech stocks to buy. Since the Jan. opener, RARE plunged 18%. In the trailing one-year period, it shed 45% of its equity value. Unfortunately, the financials don’t provide much support either, with Gurufocus warning it’s a possible value trap.
On the optimistic front, Ultragenyx features a strong cash-to-debt ratio of 23.67 times (above 62.39% of the industry). Also, its three-year revenue growth rate pings at 41.5%, outpacing 80.84% of its peers. Finally, Wall Street analysts peg RARE as a near-unanimous strong buy. Also, their average price target stands at $90, implying 141% upside potential.
Intellia Therapeutics (NTLA)
To close out this list of biotech stocks to buy, Intellia Therapeutics (NASDAQ:NTLA) provides an intriguing mix of potential and pitfalls. Another entry into the CRISPR gene-editing world, Intellia recently received a regulatory green light from the U.S. Food and Drug Administration (FDA) to test its technology in human patients. Notably, the go-ahead is the first domestic test of an in-vivo gene-editing drug.
Not surprisingly, NTLA performed better than many of the speculative biotech stocks to buy within the CRISPR realm. Since the January opener, NTLA gained over 7% of its equity value. Nevertheless, it’s still wildly risky. In the trailing year, it’s down more than 49%. Also, Intellia’s operations are a mess, with negatively trending revenue and profitability metrics.
Also, it’s worth noting that the process of CRISPR gene editing is neither 100% efficient nor 100% accurate. Therefore, the methodology presents the risks of unintended consequences. Still, on the other hand, the potential to open a new door of therapeutics may keep interest elevated. Here’s the bottom line: covering analysts peg NTLA as a consensus strong buy. Moreover, their average price target stands at $90.93, implying nearly 145% upside 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.
