Health and Healthcare

Jefferies Identifies 5 Top Biotech Stocks for Huge Upside

Chris Lange

Published: March 23, 2016 11:15 am

Last Updated: January 13, 2020 11:36 am

Biotech stocks have been absolutely beaten up over the past eight months, even the iShares NASDAQ Biotechnology Index (NASDAQ: IBB) is down over 20% year to date. However this could be a turning point for the industry, according to one key analyst. While Jefferies believes most of the significant biotech downside already occurred, with funds flowing out of health care, negative drug pricing rhetoric and few major data/launch catalysts, volatility could continue in the near term, or at least until merger and acquisition activity picks up.

Looking at the long-term, the brokerage firm believes this creates excellent buying opportunities with concrete earnings outlooks, attractive up/down scenarios or promising pipelines. The stocks that Jefferies is looking are Vertex Pharmaceuticals Inc. (NASDAQ: VRTX), BioMarin Pharmaceutical Inc. (NASDAQ: BMRN), Medicines Co. (NASDAQ: MDCO), Ultragenyx Pharmaceutical Inc. (NASDAQ: RARE) and Vanda Pharmaceuticals Inc. (NASDAQ: VNDA).

Jefferies believes that Vertex will continue to be the leader in a well-circumscribed, high-margin, high barrier-to-competitive-entry cystic fibrosis space. The company currently is seen at a highly attractive long-term entry point. The firm believes there is already broad street understanding that near-term consensus Orkambi numbers may be optimistic, expectations for VX-661/Kalydeco in het/mins are realistically low. Shares of Vertex were trading down 2.5% at $84.62 on Wednesday, with a consensus analyst price target of $131.67 and a 52-week trading range of $75.90 to $143.45.

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