Best biotech stocks represents a concept that, no matter what, the market cycle fundamentally delivers relevance. Now, let me back up by stating that no individual company offers a guarantee of success to investors. You must conduct your own due diligence. However, as a narrative, the biotechnology industry stands at the forefront of humanitarian innovation. The space has never been more important than it is right now.
From the strictly financial view of investing in biotech stocks, the underlying sector presents an extremely lucrative backdrop. According to Precedence Research, the global biotech market reached a valuation of over $1.22 trillion in 2022. Experts project that the segment will expand at a compound annual growth rate (CAGR) of 12.8% between 2023 and 2030. At the culmination of the forecast period, the industry could be worth $3.21 billion.
Another compelling angle to high-return biotech stocks is that they might not correlate with broader economic concerns. To be clear, funding from outside investors can always dry up because of downcycles. However, the search for innovative therapeutics won’t stop because of the ebb and flow of monetary policy. With that, below are the top biotech stocks to consider.
Regeneron Pharmaceuticals (REGN)
Coming to worldwide fame due to its search for a Covid-19 therapeutic, Regeneron Pharmaceuticals (NASDAQ:REGN) primarily supports patients with eye diseases, allergic and inflammatory diseases, cancer, cardiovascular and metabolic diseases, pain, infectious diseases, and rare diseases, according to its corporate profile. Though a relevant player among the best biotech stocks, Regeneron got off to a poor start this year.
Since the Jan. opener, REGN slipped more than 2%. Nevertheless, the red ink makes for an intriguing discount. Currently, the market prices shares at a forward multiple of 16.83. As a discount to projected earnings, Regeneron ranks better than 68.97% of its peers. Also, REGN trades at a price-earnings-growth ratio of 0.68. In contrast, the sector median stands at a loftier 1.42 times.
Notably, analysts still regard REGN as one of the top biotech stocks, pegging it as a moderate buy. Among 18 experts within the past three months, 13 rate shares a buy, four a hold, and one a sell. Overall, their average price target lands at $863.12, implying nearly 23% upside potential.
Based in Germany, BioNTech (NASDAQ:BNTX) develops and manufactures active immunotherapies for patient-specific approaches to the treatment of diseases. Of course, the company garnered the spotlight for its partnership with Pfizer (NYSE:PFE) to develop a Covid-19 vaccine. However, with fading fears of the SARS-CoV-2 virus, BNTX plunged badly. Since the Jan. opener, shares gave up nearly 28% of equity value.
To be fair, the revenue tally in the first quarter of 2023 came out to $1.37 billion, a shocking cry from the $7.02 billion posted in the year-ago quarter. That just shows you how much demand for the Covid-19 vaccine plummeted. So, when I tell you that BNTX trades at a forward multiple of 19.52 – lower than 63.79% of its biotech peers – you might say it’s for a reason.
Fair enough. However, BioNTech can still leverage its acumen in developing the Covid vaccine into other vaccines and therapeutics. Therefore, BNTX still carries the potential of being one of the best biotech stocks. Also, the underlying company features an almost-bulletproof balance sheet, backed by a strong cash account and high fiscal stability.
Voyager Therapeutics (VYGR)
One of the intriguing ideas for those investing in biotech stocks, Voyager Therapeutics (NASDAQ:VYGR) is a clinical-stage gene therapy company focused on developing life-changing treatments for severe neurological diseases. Per its public profile, Voyager is committed to advancing the field of adeno-associated virus gene therapy through vector engineering and optimization, among other advanced protocols. Since the start of the year, VYGR skyrocketed over 69%.
Fundamentally, much of Voyager’s investment thesis centers on the underlying science. Yes, VYGR trades at a forward multiple of 8.02. Technically speaking, Voyager ranks better than nearly 88% of its biotech peers as a discount to projected earnings. However, the unpredictable nature of its financials has Gurufocus warning that VYGR could be a possible value trap.
However, what also makes Voyager one of the high-return biotech stocks is Wall Street sentiment. Although only three analysts cover it within the past 90 days, VYGR achieved a unanimous strong buy assessment. Enticingly, their average price target clocks in at $15.67, implying nearly 54% upside potential.
Headquartered in Vancouver, British Columbia, Canada, Zymeworks (NASDAQ:ZYME) is a clinical-stage biopharmaceutical company dedicated to the development of next-generation multifunctional biotherapeutics. Per its public profile, Zymeworks’ suite of therapeutic platforms and its fully integrated drug development engine enables the precise engineering of highly differentiated product candidates. Since the start of the year, ZYME gained almost 9% of its equity value.
Even better, over the trailing one-year period, ZYME moved up almost 40%. To be fair, Gurufocus also warns its readers that Zymeworks could be a possible value trap. That said, shares trade at 1.2 times tangible book value compared to the sector median of 2.72 times. In addition, the company enjoys decent stability in the balance sheet. For example, its equity-to-asset ratio comes in at 0.79 times, ranked higher than 63.71% of its peers. Lastly, Wall Street analysts peg ZYME as a consensus moderate buy. Their average price target stands at $13.50, implying nearly 65% upside potential. Thus, it’s one of the best biotech stocks for speculators.
Based in San Francisco, California, Innoviva (NASDAQ:INVA) is a healthcare-focused asset management company. According to its corporate profile, Innoviva intends to participate in the development, commercialization, and financial management of bio-pharmaceuticals. Further, it creates shareholder value by maximizing the long-term potential of its royalty portfolio and bolsters innovation in areas of significant unmet medical need.
So far, the market hasn’t quite responded well to INVA. Since the January opener, shares tumbled nearly 7%. Also, in the trailing one-year period, INVA gave up more than 14% of its equity value. That said, there might be legitimate value here for those seeking undervalued biotech stocks. Right now, INVA trades at 3.69 times trailing sales. In contrast, the sector median comes in at 9.65 times. It’s not just a fluff stat either. On a per-share basis, Innoviva posts a three-year revenue growth rate of 14.8%, above 60.68% of its rivals. Also, its book growth rate during the same period impresses at 38.2%.
According to EF Hutton’s Constantine Davides, INVA is a buy with a price target of $22.50. This implies nearly 82% upside potential.
For those that want to go full bore with their high-return biotech stocks, Celularity (NASDAQ:CELU) might be of interest. First, though, a word of sharp warning. At the time of writing, CELU trades hands at 49 cents a pop. As well, since the beginning of this year, CELU hemorrhaged 57% of its equity value. In the trailing one-year period, CELU tanked almost 88%. Buyer beware – I say again, buyer beware.
Still, over the past year, Celularity has on occasion attracted intrigue among Wall Street analysts. A clinical-stage biotech firm, Celularity leads the next evolution in cellular medicine by developing off-the-shelf placental-derived allogeneic cell therapies, including unmodified natural killer (NK) cells, genetically modified NK cells, T-cells engineered with CAR (CAR T-cells), and mesenchymal-like adherent stromal cells (ASCs) targeting indications across cancer, infectious and degenerative diseases. Put another way, if the company goes through clinical trials with flying colors, CELU may skyrocket. If not, it’s down to the dumps.
Right now, H.C. Wainwright’s Swayampakula Ramakanth believes that CELU can hit $2.50 per share. If so, such a price would imply over 410% upside.
Another example of top biotech stocks if you’re into extreme speculation, Chimerix (NASDAQ:CMRX) might be worth a look. However, CMRX also comes with a caveat. Priced at a little over a buck, it’s not as outrageously risky as Celularity on paper. Still, since the start of the year, CMRX gave up more than 34% of its equity value. In the trailing one-year period, Chimerix shares tumbled more than 40%.
A development-stage biopharma company, Chimerix aims to accelerate the advancement of innovative medicines that make a meaningful impact in the lives of patients living with cancer and other serious diseases. Interestingly, one of its most advanced clinical-stage development programs, BCV, is an antiviral drug candidate developed as a potential medical countermeasure for smallpox. Terrifyingly, smallpox may reemerge, though likely in the form of bioterrorism or a laboratory accident. Under this context, it’s good to know that biotechs maintain watch.
On a final note, analysts peg CMRX as a unanimous strong buy. Their average price target stands at $7.67, implying nearly 524% 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.