When people are selling first and asking questions later, that is the exact time when savvy investors start to nibble at top stocks that have been hammered. As we reported back in the late winter and early spring when the biotech stocks were taken to the woodshed, many trade at forward multiples lower than slow-growth pharmaceuticals. The team at Stifel sees it that way, and in a new report they highlight their top stocks to buy right now.
The analysts’ earnings preview focused in on the top stocks with strong earnings momentum and possible catalysts. We screened for the larger cap companies rated Buy.
Alexion Pharmaceuticals Inc. (NASDAQ: ALXN) is a top stock to buy at many Wall Street firms including Stifel, and it has been considered by some firms as a potential acquisition target. Some analysts see likely strong accretive near-term to an acquirer, given the very impressive $1.5 billion in company revenues that are big enough to be significant to a bigger company. The FDA has granted an orphan drug designation to Soliris, its only marketed product, for the treatment of patients with myasthenia gravis, a rare neurological disorder, which reportedly affects an estimated 13,600 people in the United States.
Stifel is above the consensus estimates for the quarter, and it also believes Soliris label updates in the United States and in Europe could provide a boost. The Stifel price target for the stock is $222. The Thomson/First Call estimate is posted at $198.57. Alexion closed Wednesday at $160.73.
Biogen Idec Inc. (NASDAQ: BIIB) is another top stock to buy at Stifel, and despite overall optimism on the stock the firm expects the company to not beat current earnings estimates. Many on Wall Street are predicting that Biogen’s Tysabri earnings will have a meaningful jump this year and beyond. Wall Street analysts applauded the release of data on a monoclonal antibody called BIIB033, which is safe and tolerable in people, according to the combined results of two Phase 1 clinical trials that tested high doses in healthy people and those with multiple sclerosis.
The Stifel team is focusing on forward updates regarding the status of patent litigation over the 480 mg daily dosing patent covering Tecfidera, and any details on if anti-LINGO data in acute optic neuritis will be presented at a competitor’s conference in January 2015.
The Stifel price target for the biotech giant is $376, and is right in line with the consensus target of $376.76. Biogen closed Wednesday up over 1% at $305.69.
Medivation Inc. (NASDAQ: MDVN) is a stock the Stifel analyst are very bullish on, and they are way above street estimates for earnings. They attribute the higher number to higher forecast milestone payments from existing partners. Medivation has a top prostate cancer drug that many on Wall Street feel would be a valuable acquisition. Xtandi is a highly leverageable likely blockbuster product in prostate cancer, a very large market segment with potential upside in breast cancer. The company’s ongoing partnership with Astellas suggests a natural buyer, but other third parties looking to grow product sales would also be interested.
The Stifel price target is $112, and the consensus figure stands at $107.39. Shares closed Wednesday trading down over 2% at $89.63.
Acorda Therapeutics Inc. (NASDAQ: ACOR) posted very good second-quarter numbers, beating analyst estimates for earnings and revenues, while maintaining the expected forward guidance. The company’s top product is its FDA-approved drug Ampyra, which is designed to improve walking in patients with multiple sclerosis. The company has two additional FDA-approved drugs, but they contribute much less compared to Ampyra’s annual revenue. The analysts at Stifel have said they expect the company to expand the use of Ampyra for other conditions. The Stifel team is looking for details of the company’s plan for its new drug CVT-105.
The Stifel price target for the stock is $47, and the consensus target is $38.58. The stock closed Tuesday at $31.15.
Even with the top biotech stocks, volatility is always a possibility, and these are not suitable for conservative portfolios. With that in mind, aggressive investors who can look past current volatility and headline risk may be well rewarded down the road.