Wall Street Hammered These 3 Biotech Stocks: Are They Really Screaming Buys?

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One thing that investors know for sure they would like to do in the next life is to come back as a stock analyst. It never fails, they will pound the table on a company over and over, and if that company hits a rough spot, the thesis that was awesome 50% higher is no longer relative after a bad quarter. The price gets cut, the stock is downgraded and you move on to the next big story.

As a result of a bad quarter or two, or less than stellar clinical data sometimes, top biotech companies are absolutely destroyed and thrown on the trash heap. We combed through the Merrill Lynch database and found three companies that at one time or another, when they were much higher than they are now, had analysts going crazy. The Merrill Lynch analysts still like them, have huge price targets and all are rated Buy.

Aduro Biotech

This stock had a super successful initial public offering back in the spring, but after skyrocketing up it has been cut in half. Aduro Biotech Inc. (NASDAQ: ADRO) is a clinical-stage immunotherapy company focused on the discovery, development and commercialization of therapies that transform the treatment of challenging diseases. Its technology platforms, which are designed to harness the body’s natural immune system, are being investigated in cancer indications and have the potential to expand into autoimmune and infectious diseases.

Aduro’s LADD technology platform is based on proprietary attenuated strains of Listeria that have been engineered to express tumor-associated antigens to induce specific and targeted immune responses. Based on compelling clinical data in advanced cancers, this platform is being developed as a treatment for multiple indications, including pancreatic, lung and prostate cancers, and mesothelioma and glioblastoma.

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Merrill Lynch remains very positive and noted that Aduro recently announced a milestone payment from Janssen for the submission of anIND for ADU-214 in advanced non-small cell lung cancer. The dose-escalating Phase 1 study (c40 patients) will evaluate safety and immunogenicity of intravenously administered ADU-214. Janssen is expected to commence the study by the end of this year. Aduro could be eligible to receive up to $786.5 million in additional milestone payments and royalties on worldwide sales.

The Merrill Lynch price target for the stock is $40, and the Thomson/First Call consensus price target is higher at $47. Shares closed Thursday at $27.02.