Don’t Miss Out: 3 Biopharma Stocks with Massive Upside Potential

Stocks

Stock	Price	52 Week Range	Marketcap	EPS	Dividend Yield	Chart (24H)	Sector	Employees	Last Updated
Gilead Sciences, Inc. GILD	$118.73		147.32B	5.03	2.66%		Healthcare	17,600	15 hours ago
Alkermes plc ALKS	$28.97		4.78B	2.07	0.00%		Healthcare	1,800	15 hours ago
Novavax, Inc. NVAX	$8.74		1.42B	2.22	0.00%		Healthcare	952	15 hours ago

Biopharmaceutical stocks have been on a tear so far this year. Many key companies on the medicinal frontier have rewarded shareholders handsomely for their faith and favor — though a few of those hot stocks still have the legs to run further. Industry research firm IMARC forecasts that by 2017, the global biopharmaceutical market will reach $166 billion in sales. This represents double-digit annual growth over the next four years. For astute investors, this sector provides a highly lucrative opportunity.

Boutique drugs targeting rare yet dangerous conditions can become billion-dollar blockbusters. Additionally, large pharmaceutical firms like **Eli Lilly**, **Merck**, and **Bristol-Myers Squibb** are engaging heavily in biopharmaceutical M&A to rejuvenate their mature drug pipelines. However, investing in the biopharma sector requires balancing potential high rewards with considerable risks. Statistics reveal that just three out of every 10 drugs entering clinical trials will ever make it to market. Thus, cautious and well-informed investment strategies are crucial.

In light of this, let’s delve into three promising biopharma stocks – **Gilead Sciences**, **Alkermes**, and **Novavax** – each representing different market capitalization tiers to suit varying risk appetites.

Editor's Note: Analysis and insight for this article were originally sourced sourced from our friends at InvestorPlace 

Gilead Sciences (GILD) – Dominating the Large Cap Arena

Gilead Sciences, Inc.

GILD

$118.73

1%

Gilead Sciences isn’t just another name in the biopharma sector. With a market cap of $86.8 billion, Gilead stands as a titan in the industry, offering groundbreaking treatments for chronic conditions and presenting significant investment appeal.

Investment Rational: A New All-Time High

Recently, Gilead’s stock set a new all-time high following a phase 2 study of its oral drug, idelalisib. This regimen produced an astounding 97% response rate and a 93% survival rate in treating chronic lymphocytic leukemia (CLL). This success doesn’t merely reflect Gilead’s strong pipeline; it signifies transformative progress in cancer therapy with substantial market potential as CLL is the second most common leukemia in the United States.

Hepatitis C and HIV: Market Making Drugs

Beyond idelalisib, Gilead’s oral hepatitis C drug, sofosbuvir, has been validated by the European Medicines Agency and is currently under FDA review. Gilead also commands a strong presence in the HIV treatment sector, notably with its four-drug therapy, Stribild. These advances underscore Gilead’s front-running status in tackling some of the world’s most challenging diseases.

Financials: Attractive Valuation

Despite Gilead’s impressive stock appreciation over the past year, it maintains relatively moderate valuations, with a forward price-to-earnings (P/E) ratio of 19.5 and a price/earnings-to-growth (PEG) ratio of 1.1. In terms of financial health, Gilead’s solid pipeline coupled with its robust position suggests ongoing investment potential.

Analyst Ratings for Gilead Sciences (GILD)

Summary of Analysts’ Outlook:

– **MarketWatch**: Gilead Sciences has an average target price of $82.65 with 32 analyst ratings. The average recommendation is Overweight.

– **Nasdaq**: The consensus rating is Moderate Buy, but specific target price information was not available.

– **TipRanks**: The average price target is $81.26. The stock received 25 buy ratings, 20 hold ratings, and zero sell ratings.

– **MarketBeat**: The consensus rating for Gilead Sciences is Hold. The average price target is $82.88, with a high forecast of $105.00 and a low forecast of $69.00.

– **Zacks**: The average price target based on short-term targets is $83.92.

Alkermes (ALKS) – A Midcap Contender with a Diverse Portfolio

Alkermes plc

ALKS

$28.97

0%

Transitioning to the midcap spectrum, Alkermes boasts a market cap of $4.3 billion and offers a diversified array of commercial products addressing multiple major diseases, presenting an attractive investment opportunity.

Investment Rational: Multidimensional Pipeline

Alkermes features a dynamic portfolio of roughly 20 commercial products targeting diseases such as multiple sclerosis (MS), schizophrenia, narcotic and alcohol dependence, and type 2 diabetes. Notable among their pipeline drugs are 5461, aimed at treating major depression by modulating opioid receptors, and 3831, designed for treating schizophrenia with the goal of reducing common side effects like weight gain.

Future Prospects: Novel Therapies

Alkermes’ innovative strategies, especially concerning opioid receptor modulation, could pave the way for groundbreaking treatments with significant clinical and market implications. Upcoming clinical data presentations are poised to act as catalysts for future stock performance.

Financials: Valuation Dynamics

Alkermes appears overvalued on a forward P/E basis, trading at 28 times next year’s earnings. However, its PEG ratio of 0.37 points to undervalued growth potential. With $209 million in cash juxtaposed with $370 million in debt, Alkermes demonstrates a fairly balanced financial stance. Its promising future, contingent on positive clinical trial outcomes, solidifies its appeal as a midcap investment.

Analyst Ratings for Alkermes (ALKS)

Summary of Analyst Outlook:

– **Consensus Rating**: Most analysts are bullish on Alkermes with either a “Buy” or a “Moderate Buy” rating.

– **Price Target**: The average price target ranges from $34.63 to $36.30, indicating an expected increase of around 36.93% to 48.10% from the current stock price.

– **Current Price**: As of the latest data, the stock price is around $24.51 to $24.78.

– **Upside Potential**: The potential gain varies between 28.62% to 101.82% based on analyst predictions.

Novavax (NVAX) – The High-Risk, High-Reward Small Cap

Novavax, Inc.

NVAX

$8.74

8%

Represented by Novavax, the small-cap category introduces a high-risk, high-reward investment opportunity. Sporting a modest market cap of $305.4 million, Novavax’s cutting-edge approach to vaccine development could transform the sector.

Investment Rational: Vaccine Innovation

Novavax employs recombinant DNA molecules to develop tailored vaccines rapidly. This proprietary method enables the production of targeted vaccines in a matter of weeks, a crucial advantage during emergent pandemics. This strategic edge suggests tremendous potential in global healthcare crises response.

Future Prospects: Novel Therapies

Currently, Novavax is developing vaccines for H5N1 influenza and Respiratory Syncytial Virus (RSV). Contracts with entities like the U.S. Office of Biomedical Advanced Research and Development Authority and the Department of Homeland Security for flu and foot-and-mouth disease vaccines demonstrate Novavax’s strategic partnerships and market validation.

Recent Performance: Riding the Speculation Wave

Trading slightly over $2 per share and surging 79% over the past year, much of Novavax’s recent performance is tied to speculation about their potential role in developing a vaccine for the H7N9 influenza strain. This speculative nature underscores both the high risks and potentially extraordinary rewards associated with investing in Novavax.

Analyst Ratings for Novavax (NVAX)

Summary of Analyst Outlook:

– **Consensus Rating**: Analysts have a Moderate Buy consensus for Novavax, indicating a generally positive outlook.

– **Price Target**: The average price target is $22.8, representing a potential gain of 30.04% from the current price.

– **Recent Ratings**: The most recent ratings from B of A Securities, B. Riley Securities, and HC Wainwright & Co. maintain various buy and hold ratings.

– **Earnings Performance**: Novavax has beaten its EPS estimates 75.00% of the time in the past 12 months, outperforming its overall industry in the last calendar year.