The biotech analysts at PropThink always try to handicap the best and worst scenarios on the stocks they cover. PropThink is an intelligence service that delivers long and short trading ideas to investors in the health care and life sciences industries. Their focus is on identifying and analyzing technically complicated companies and equities that are grossly overvalued or undervalued.

Here are some current stocks the PropThink analysts are covering. Investors should remember that these names can be highly speculative and are not suitable for conservative portfolios.

AVEO Pharmaceuticals Inc. (NASDAQ: AVEO) may be a micro-cap stock to buy. An advisory panel vote went against the company recently, but it may be a bottom-fishing candidate. Aveo is a developmental stage biotech company, with its leading product candidate designed to treat renal cancer. Seth Klarman’s Baupost Group hedge fund owned 4.9 million shares at the beginning of this year. The Thomson/First Call price target is $2.90.

Onyx Pharmaceuticals Inc. (NASDAQ: ONXX) is a company with huge momentum. For its most recent quarter, Onyx delivered a doubling in revenue from the previous year to $145.5 million, with practically all the gains coming from its multiple myeloma drug Kyprolis. The consensus price target for the stock is $106.

Celgene Corp. (NASDAQ: CELG) hit a new 52-week high this week. The company recently reported data from its ongoing phase III trial of apremilast this month, showing the drug successfully reduced psoriatic arthritis symptoms by at least 20% versus placebo. The consensus target is at $140.

Regeneron Pharmaceuticals Inc. (NASDAQ: REGN) is another name that has been on a huge roll. Regeneron is an integrated biopharmaceutical company that focuses on development of new candidates for serious ailments primarily in areas like ophthalmology, inflammation, cancer and hypercholesterolemia. The consensus for the stock is at $288.50.

MAKO Surgical Corp. (NASDAQ: MAKO) is an intriguing stock to the PropThink team, although not yet listed as a stock to buy. MAKO Surgical is a medical device company that markets its advanced robotic arm solution, joint-specific applications for the knee and hip, and orthopedic implants for orthopedic procedures in the United States and internationally. The consensus price target is $12.

ViroPharma Inc. (NASDAQ: VPHM) is expected to deliver growth despite a poor quarter. ViroPharma’s commercial and pipeline progress is on track, with new timelines announced for several clinical programs. With its lead drug Cinryze continuing to show growth and what appears to be growing market share, the company is moving beyond the loss of its Vancocin franchise. The consensus price target for the stock is $33.

Cubist Pharmaceutical Inc. (NASDAQ: CBST) is the ultimate binary event play. With a critical court decision pending, the stock could have tremendous movement, depending on the outcome. Cubists’ primary revenue drug Cubicin (daptomycin), which is an injectable antibiotic with nearly $1 billion in sales, is being challenged by a generic drug manufacturer. Investors need to be very careful here. The consensus price target for the stock is $52.50.

With a penchant for large-cap names with huge momentum and small-cap names on the verge of a big success, PropThink offers a good balance of biotech information and data. Again, investors should remember that some of the highly speculative stocks may be totally unsuitable for conservative portfolios. With that caveat in place, some of the names could also lead to spectacular gains.

They point to five specific reasons for this conclusion:

1. Recent outperformance in past two years was recovery from prior year weakness.
2. Biotech has been outperforming S&P only since the first quarter of this year.
3. Despite price-to-earnings expansion, multiples are well below precrisis levels.
4. Current multiples look significantly below the last known bubble.
5. Current multiples also are well below the average price-to-earnings in the period from 2005 to 2008.

Even though biotech currently trades at a 50% premium to the S&P 500, the Deutsche Bank team has a list of solid stocks to buy now.

Amgen Inc. (NASDAQ: AMGN) is a top stock to buy at Deutsche Bank. With a gigantic pipeline and solid earnings growth, this biotech leader is poised to succeed for years to come. Deutsche Bank has a $115 price target. The Thomson/First Call estimate is also at $115. Investors receive a 1.80% dividend.

Celgene Corp. (NASDAQ: CELG) hit a new 52-week high yesterday. The company recently reported  data from its ongoing phase III trial of apremilast this month, showing the drug successfully reduced psoriatic arthritis symptoms by at least 20% versus a placebo. Deutsche Bank has a $143 price target. The consensus target is at $140.

Biogen Idec Inc. (NASDAQ: BIIB) is another massive mega-cap name that makes the list of stocks to buy. Biogen Idec discovers, develops, manufactures and markets therapies for the treatment of neurodegenerative diseases, hemophilia and autoimmune disorders in the United States and internationally. The Deutsche Bank target for the stock is $240 and the consensus estimate is $226.

Gilead Sciences Inc. (NASDAQ: GILD) has been recording good growth numbers. The market is apparently anticipating further increases in earnings in the future, given the higher trailing price-to-earnings ratio. The Deutsche Bank price objective is $69 and the consensus is lower at $63.

Regeneron Pharmaceuticals Inc. (NASDAQ: REGN) is another name that has been on a huge roll. Regeneron is an integrated biopharmaceutical company that focuses on development of new candidates for serious ailments primarily in areas like ophthalmology, inflammation, cancer and hypercholesterolemia. Deutsche Bank has a $310 target, while the consensus is at $288.50.

Onyx Pharmaceuticals Inc. (NASDAQ: ONXX) is another company with huge momentum. For its most recent quarter, Onyx delivered a doubling in revenue to $145.5 million from $72 million in the previous year, with practically all the gains coming from their multiple myeloma drug Kyprolis. The Deutsche Bank target price for the stock is $105. The consensus is $106.

Vertex Pharmaceuticals Inc. (NASDAQ: VRTX) is a leader in the fight against hepatitis C (HCV) infection. The company also has a groundbreaking drug for the treatment of cystic fibrosis. Deutsche Bank has a $100 price target for the stock. The consensus is at $93.

Alexion Pharmaceuticals Inc. (NASDAQ: ALXN) has also been on fire lately. Soliris, its lone drug approved by the Food and Drug Administration, saw sales rise by 38% to $338.9 million in its most recent quarter, as non-GAAP net income jumped 49%. The Deutsche Bank target is $117 and the consensus is actually higher at $120.50.

Investors that buy any of these names are immediately becoming momentum players, looking to buy high and sell higher. Each of the Deutsche Bank stocks to buy either has a tremendous portfolio and pipeline or a blockbuster drug that dominates its niche. These stocks may represent the best bets that the biotech sector has to offer.

What is interesting is that the news came at close enough to the same time that Genomic Health Inc. (NASDAQ: GHDX) filed to sell up to 10 million shares of common stock. That company is planning to raise the funds for general corporate purposes, which include working capital, capital spending, debt repayment or redemption, and future acquisitions and strategic investment opportunities.

Myriad Genetics has been at the center of much controversy because it has been in legal fights for years to protect that patenting of certain genes. By going after patenting the genes themselves, the argument was that Myriad was trying to own a piece of each and every one of us rather than merely patenting how it would identify certain genes or how to treat those genes.

Myriad shares are up 2.1% at $33.81 and the stock hit a new 52-week high of $34.67. Genomic Health Inc. is up 2.1% at $35.56 on the day. A much smaller player is Rosetta Genomics, Ltd. (NASDAQ: ROSG), but its shares have not felt the same reward and interest has avoided the highly volatile stock name as it has lost more than 80% from its peak value in the last year.

Our take is worse than income being lower than expectations. Dendreon said that net product revenues fell to $67.6 million, compared to $82.0 million for the same quarter a year ago. Dendreon is supposed to be seeing sales decline marginally now and then rise through time, but this is down a sharp 17.6% year over year. Here are the total revenues in each of the past four quarterly reports, in order of most recent first: $85.493 million, $77.971 million, $79.992 million and $82.074 million. Compare $67.6 million to these and you will see that sales were the worst over the entire quarterly cycle course of 2012.

Thomson Reuters was calling for -$0.48 per share in earnings and sales of $80.15 million. Some analysts were calling for sales up in the $85 million and $86 million range. The long and short of the matter is that it is just far too soon for Dendreon’s sales cycle to already be petering out.

Dendreon claims to have added 33 net new accounts in the first quarter. This brings the total number of accounts that have infused to 835. Dendreon is claiming that it can reduce its cost of goods sold to less than 50% of net product revenue in the third quarter 2013 at its current forecast levels.

You might expect that the reaction is bad, and that is an understatement. Dendreon’s stock price is down more than 15% to $3.99, against a 52-week range of $3.69 to $9.34. Note that the market cap here is down to $711 million. With the company losing so much money, it will be very hard to get excited that it had $337.3 million in cash, cash equivalents and short-term and long-term investments at the end of the quarter. Keep in mind that this balance compared to $429.8 million as of December 31, 2012, and that translates to a quarterly cash burn rate of about $92.5 million.

Our take here is simple, even if the end game is uncertain. Dendreon’s cash burn rate puts it at financial implosion in less than a year. The company claims that its cost of goods sold will be much lower, but if it cannot generate a substantial amount higher in Provenge sales, then the company is going have to try to save itself by selling itself. Unfortunately for shareholders, this might be a takeunder, unless Provenge proves to be potent against other forms of cancer than just late-stage prostate cancer.

Before calling it a bubble, there are many things to consider. While there are some major ETFs in the sector, we have noted previously how these biotech ETFs are often misrepresented by their name, given the weightings and stocks they hold. Another issue is culling out the risky one-candidate companies from the established biotech leaders. A long-term comparison also can be made to drug giants for relative valuation and for dividends.

As far as why we are asking if a bubble is forming here, it is not just because these stocks have performed well. The four major U.S. biotech players are Amgen Inc. (NASDAQ: AMGN), Biogen Idec Inc. (NASDAQ: BIIB), Celgene Corp. (NASDAQ: CELG) and Gilead Sciences Inc. (NASDAQ: GILD). All four companies hit new all-time highs this last week.

24.7 Wall St. is taking a look at each for valuation metrics by market capitalization, forward earnings multiples, sales and earnings growth expected, and paring up the current stock price against the Thomson Reuters consensus price targets from Wall Street analysts.

Before we get into biotech, Pfizer Inc. (NYSE: PFE) and Merck & Co. (NYSE: MRK) need to be evaluated. Both drug giants were trading very close to multiyear highs going into earnings this week. Somehow the market did not anticipate that both companies were going to offer muted guidance ahead. Merck is now down almost $4 from its 52-week high of $48.78, and Pfizer is down more than $2 from its 52-week high of $31.15. Both stocks trade at 12 or 13 times the projected 2013 earnings estimates from Thomson Reuters.

What sets Big Pharma stocks apart from biotech stocks is that there is just no revenue growth expected this year, or next even, if the so-called patent cliff woes are mostly behind these companies. Pfizer’s common stock dividend yield is 3.2%, versus 3.6% for Merck. Only one of the major biotechs (Amgen) pays a dividend as the sector is still tracking for growth.

Amgen Inc. (NASDAQ: AMGN) took a beating after its earnings report last week. Even after being added to the Conviction Buy List at Goldman Sachs, the biotech giant is up 2% at $106.25 after a recent all-time high of $114.95. The firm’s price target is $130 now, with a consensus target from analysts down at $111.36 and a street-high target of $133 for Amgen. It took a sell-off for this stock to get back under the consensus price target. Amgen shares are still up 24% so far in 2013 after the recent sell-off. The good news is that Amgen trades at about 14.6 times expected earnings this year, but the bad news is that sales growth is projected to be less than 5% for this year and next. Amgen is not really expensive for a biotech stock, but it is missing that monster growth. Amgen also acts like a new Big Pharma stock now that its dividend yield is 1.8%.

Biogen Idec Inc. (NASDAQ: BIIB) is now down $10 from its recent all-time high of $226.18. It was removed from Goldman Sachs’ Conviction Buy List, but at $216.25 its consensus price target is all the way down at $202.56. Biogen’s multiple sclerosis franchise is now approaching a total domination in the field. It pays no dividend but is expected to post 16% to 17% sales growth in both 2013 and 2014. The problem that investors may face going forward is that valuation is stretched at more than 27 times the consensus 2013 earnings estimate, since this stock has risen a whopping 48% so far in 2013.

Celgene Corp. (NASDAQ: CELG) is down just over $10 per share from its recent all-time high of $128.52. The consensus price target of $124.69 is also under the most recent high, while the street-high price target is up at $143.00. What Celgene has going for it is that some market pundits expect its earnings to double by 2015 to 2016. Sales are expected to rise more than 10% for at least the next two or three years, as well. That being said, Celgene trades at about 21 times expected 2013 earnings estimates, now that shares have risen a whopping 50% so far in 2013.

Gilead Sciences Inc. (NASDAQ: GILD) is down about $5 from its recent all-time high of $55.16. Gilead trades at about 25-times expected 2013 earnings, and its shares are up by 37% so far in 2013. The consensus price target is above the prior high at $58.20, and the highest target price is around $70 for the HIV drug leader. Sales continue to grow in the double-digits and are expected to maintain that path for at least the next two years.

Now before you run off scratching your head, there are the market capitalization figures to consider, versus $208 billion for Pfizer and $138 billion for Merck. Amgen is king at about $80 billion as of now, and it seems to be the first biotech that could ultimately reach the mega-cap class at $100 billion. The problem with thinking Amgen will be first is that analysts project more upside and growth at Gilead, and its market cap is almost $77 billion. Biogen Idec is worth more than $51 billion and Celgene is worth about $49 billion.

Biotech stocks have performed incredibly well so far in 2013. For value-oriented investors, these still need to soften up in price. For investors who chase growth at any price, there is still some perceived upside. The good news is that biotechs have pulled back and now Big Pharma stocks have all pulled back. The bad news is that if the market does not keep rising, it is very likely that investors will look for more patient entry points before chasing these high gains and valuations in biotech.

For those looking for undervalue growth with more risk, a firm called PropThink has just issued a list of biotech stocks that it feels are not represented with proper valuations (yet) by the market.

One more issue we noted in much more detail in our ETF Folly for Biotech ETFs is that the exchange traded fund universe is very underrepresented in this sector, regardless of valuation analysis. The top ETFs here are the iShares Nasdaq Biotechnology (NASDAQ: IBB), SPDR S&P Biotech (NYSEMKT: XBI), First Trust NYSE Arca Biotech Index (NYSEMKT: FBT) and the Market Vectors Biotech ETF (NYSEMKT: BBH). Note that the combined market capitalizations are not quite 2% of the combined market valuations of just the top four biotech stocks.

Biotech stocks often hinge on what is known as a binary event. That can be anything from a pending drug approval to a buyout by a larger company. It takes solid research to size up the odds of such an event, so investors know which names to consider.

In a recent report, the research team at Propthink highlighted some solid biotech names for investors to consider. It is important to remember that capital in any portfolio dedicated to biotech names should be considered speculative. It can sometimes take years for a catalyst or major binary event to propel biotech stocks higher.

Illumina Inc. (NASDAQ: ILMN) has been on the radar screen since last year. This maker of DNA sequencing equipment was almost purchased by Roche Holding earlier this year. Its tremendous earnings ability combined with the possibility that Roche returns to the table keeps this stock in play. The Thomson/First Call consensus is $60.50.

Keryx Biopharmaceuticals Inc. (NASDAQ: KERX) has had investors on a roller coaster for the past six months. The nice run by Keryx was powered by high expectations for its kidney disease drug Zerenex. Some analyst have been concerned over the patent estate at Keryx, but the Propthink team feels very comfortable with it. The consensus price target for the stock is $14.

Exact Sciences Corp. (NASDAQ: EXAS) phase 3 trial for its colon cancer detection test passed, but the stock dropped 20%. The test worked, but the detection rate was 42% lower than a colonoscopy. With $100 million in the bank and often rumored as a takeover target, Exact Sciences is a volatile name. The consensus price target is $13.50.

AVEO Pharmaceuticals Inc. (NASDAQ: AVEO) is a micro cap name that has also seen its share of volatility. According to briefing documents released yesterday, it appears that the FDA may want AVEO to run an additional trial to confirm the added benefit of its cancer drug Tivozanib, based on that reduction in overall median survival noted during the study. AVEO meets with the FDA tomorrow and that could be a tipping point. Consensus price target for the stock is $11.50. That would represent a 100% move from current trading levels.

Endo Health Solutions Inc. (NASDAQ: ENDP) has been a very strong stock recently. The FDA has barred generic drug companies from selling older formulations of the painkiller Oxycontin. Endo Health is marketing its new tamper-resistant formulation of Opana ER (oxymorphone) as an alternative, which may prove to be a strong challenger. The consensus price target for the stock is $35.50.

Biotech investing can prove to be a very challenging arena for investors. It can also be one of the stock markets most profitable areas. Look for stocks that have multiple drugs or procedure applications in their pipeline or currently on the market. Also look for companies that have enough cash to survive the testing and approval process.

In an Securities and Exchange Commission (SEC) filing, VIVUS showed that Qsymia prescriptions rose from 16,733 in January to 18,417 in February for growth of about 10%. The better news is that shipments rose to 23,812 prescriptions in March, and that represents growth of about 29%. Accelerating growth is music to ears of investors, but we caution that making bets too large on a one-month trend this early in the game are certainly no assurance that Qsymia will reach the $1 billion blockbuster drug status in the years ahead.

VIVUS only launched Qsymia to the market back on September 17, 2012. There is just too little time and too little of prescription distribution data to make serious forecasts ahead. The other good news is that these figures are ahead of the preliminary fresh projections made by BofA/Merrill Lynch.

Shares of VIVUS are up almost 5% in premarket trading, at $12.66 against a 52-week trading range of $9.86 to $31.21. The market value as of yesterday’s close was $1.22 billion.

Alkermes PLC (NASDAQ: ALKS) is already higher after its depression drug met its goals in Phase II studies. Merrill Lynch said that long-acting antipsychotics will be up 5% from a year ago, Vivitrol prescriptions are up 19% and even GLP-1 (Bydureon) is up 18% year over year. The firm rates this one only at Neutral, with a submarket target price of $24 for the stock. The Thomson Reuters consensus price target is also less than the $28.00 market price today, but Alkermes has seen a 9% gain on Wednesday.

Optimer Pharmaceuticals Inc. (NASDAQ: OPTR) was said to have IMS prescriptions of Dificid in March of 2,136, versus 1,998 in February. The firm noted that IMS data exclude hospital purchases of Dificid. Merrill Lynch rates Optimer as Underperform with only a $12.00 price target. Optimer shares trade at $14.65 today, and this stock has a $17.50 consensus price target.

Questcor Pharmaceuticals Inc. (NASDAQ: QCOR) was shown to have its Acthar gel prescriptions down in March, versus February, but the firm expects that it will show sequential sales growth in the first quarter. This biotech is rated as Buy with a $40.00 price target over the next year. The consensus price target is all the way up at $45.38, versus a $27.36 price today.

VIVUS Inc. (NASDAQ: VVUS) was shown by Merrill Lynch that Qsymia prescriptions were projected to be 6,825, versus 5,481 in February. The firm said that yesterday’s FDA expansion should lead to an inflection in prescription growth before the end of 2013 and it expects additional longer term growth from that expanded formulary status. VIVUS is rated as rated as Buy at Bank of America, with a $24 12-month price target, and the consensus price target is $18.04, versus about $11.85 today.

PropThink is a specialty research firm that focuses its coverage on the biotech and biopharma arena. We went through their research, looking for not only their best investment ideas, but stocks that had a solid thesis. It is important for investors to remember that many of these stocks are dependent on some form of U.S. Food and Drug Administration (FDA) approval, and the delay or lack of that approval can be devastating to the stock price.

The following are some of the best investment ideas from PropThink.

Orexigen Therapeutics Inc. (NASDAQ: OREX) has been followed closely by the PropThink team. Trading just under $6, Orexigen is one of three drug companies vying for the prize of an obesity drug winner. It is submitting data to the FDA again this year for its drug called Contrave. Analysts are bullish on the drug because it does not contain controlled substances. Orexigen’s alliance with Takeda Pharmaceutical for sales and distribution is considered a huge plus. The Thomson/First Call price target for the stock is $11. FDA approval could bring investors a big winner.

Halozyme Therapeutics Inc. (NASDAQ: HALO) also rates best investment idea status. The FDA of Europe, the European Medicines Agency’s Committee for Medicinal Products for Human Use (EMA CHMP), finally granted a positive opinion to partner company Baxter International Inc.’s (NYSE: BAX) drug HyQvia. The positive opinion for the drug indicates that it may be very successful when it hits the market later this year. This could provide a large revenue boost for Halozyme. The Wall St. consensus price target for the stock is $9.

With number of positive catalysts expected this year, BioMarin Pharmaceutical Inc. (NASDAQ: BMRN) has been a top pick at PropThink. The company has a robust pipeline of products and expected profitability by 2016. Its Naglazyme drug, combined with a host of phase 2 and phase 3 drugs being prepared for FDA submission, are expected to drive revenue this year. The consensus estimate for this very hot name is $67.

Having closely followed Titan Pharmaceuticals Inc., the PropThink research team was rewarded when the FDA voted to approve Probuphine, a subdermal implant of buprenorphine for the maintenance treatment of opioid dependence. The stock has been extremely volatile and is not recommended for conservative investors. However trading at less than $2 over-the-counter, it could provide big upside. The consensus price target for Titan is $5.

Huge advances in drug research often provide investors with the ultimate investing experience. Buying a biotech stock that fulfills the promise of their research can be a huge winner in a portfolio. It is always important to remember that many biotech and biopharma stocks have little or no revenue, and they live on whatever cash they have raised. If for any reason that cash runs out before FDA approval, the stock can end up going to zero. That also can prove to be the ultimate investment experience.

Biogen Idec already has a substantial lead over just about every other company producing multiple sclerosis drugs. Today’s reported approval is on TECFIDERA as a treatment for adults with relapsing MS. The press release confirmed that TECFIDERA was approved as a first-line oral treatment for MS.

Shares were already higher along with a strong market and along with positive drug news about a drug today. One word of caution is that Biogen is trading above its consensus price target from Wall St. analysts. That consensus target from Thomson Reuters has a one-year target at just over $175.00. After looking at the news, investors should probably expect that price target will likely be raised after the positive drug data and with a new FDA approval under its belt.

The news all-time high is now $184.17 and the stock closed up over 3% at $182.68. We would note that analysts have chased this and other biotech stocks up and up as the target price before the end of 2012 was all the way down at $158.50.