For years on Wall Street, the major firms have sought advice on stocks from people that actually use their product or work in the field of business they are analyzing. In a new research report, the pharmaceutical and biotech analysts at RBC highlight meetings they held with a group of six physicians. They wanted to get their thoughts and opinions on treatments and drugs for everything from hepatitis to multiple sclerosis. The expert opinions from the physicians helped the RBC team form some new thoughts and confirmed existing data and information. Based on their meetings, they favor four top stocks now as ones best positioned for continued success. All four are rated Outperform.
Biogen Idec Inc. (NASDAQ: BIIB) is a top stock to buy at RBC, which, like many on Wall Street, thought that Biogen’s Tysabri earnings would have a meaningful jump this quarter. While revenues were up 7%, the bottom line number missed by $0.08 per share, and the stock sold off after earnings, as the slide in biotech continued to pull shares down. Many analysts expect the company to reiterate guidance for anti-LINGO data in acute optic neuritis in the second half of this year, which provides the highest level of potential upside to Biogen’s share price if the results are positive. The RBC target price for the biotech giant is $325. The Thomson/First Call consensus is at $345.72. Biogen closed Wednesday at $284.
Celgene Corp. (NASDAQ: CELG) will soon launch Otezia, which was approved for treating psoriatic arthritis. The big issue for the company is the current review of the patents for its top cancer drug Revlimid, which range from 2016 to 2027. Revlimid sales have soared, totaling more than $4 billion last year and more than $1.1 billion in the first quarter, up 14% from a year ago. Although many, including the RBC team, think the judgment will go the company’s way, final decisions are still awaited. The outcome will determine the exact length and depth of Celgene’s intellectual property on the drug. RBC has placed a $190 price target on the stock, and the consensus target is $193.21. Celgene closed trading on Wednesday at $145.25.
Gilead Sciences Inc. (NASDAQ: GILD) is a top biotech that was absolutely crushed in the biotech sell-off that started in late February. Down an incredible 22% at one point, the stock trades at a very low 11 times forward earnings and has rebounded nicely. Many firms on Wall Street think the recent concerns voiced by members of Congress over the price of Sovaldi, the company’s top drug, will not remain an issue. The current launch numbers for the drug were among the highest ever recorded, and the company absolutely stunned Wall Street with its gigantic earnings report. The RBC price target is $96, and the consensus figure stands at $98.21. Gilead closed Wednesday at $78.77.
Vertex Pharmaceuticals Inc. (NASDAQ: VRTX) is another large cap biotech leader to buy, which got on the biotechnology map with its blockbuster hepatitis C drug. The company looks poised to get revenue growing again with its cystic fibrosis franchise. It already has one drug approved, but Kalydeco by itself is only appropriate for about 4% of cystic fibrosis patients. Recently Vertex said a combination of Kalydeco and an experimental compound was shown to improve lung function in a mid-stage trial, sending its shares up big. RBC has a $95 price target and the consensus target is slightly lower at $92.90. Vertex closed Wednesday at $65.17.
When Wall Street firms enlist the aid of professionals in an industry they cover, it helps to expand their overall view of the companies involved. The four top stocks to own at RBC are biotech giants with huge pipelines and prospects for the future. It should be noted though that they are suitable for portfolios with a higher risk tolerance. As we saw earlier this year, the industry is extremely volatile and subject to large potential price swings.