Healthcare Business

RBC Says These 4 Top Biotechs Could Have Big Upside Potential


This is more of a life sciences play and may look better for more risk-averse investors. Illumina Inc. (NASDAQ: ILMN) provides sequencing and array-based solutions for genetic analysis. Its sequencing by synthesis technology provides researchers with various applications and the ability to sequence mammalian genomes. It also offers arrays for a range of DNA and RNA analysis applications, including single nucleotide polymorphism genotyping, copy number variations analysis, gene expression analysis and methylation analysis, as well as allowing for the detection of known genetic markers on a single array.

The company also provides various library preparation and sequencing kits to simplify workflows and accelerate analysis, as well as genome sequencing, genotyping and non-invasive prenatal testing services. It serves genomic research centers, academic institutions, government laboratories and hospitals, as well as pharmaceutical, biotechnology, agrigenomics, commercial molecular diagnostic laboratories and consumer genomics companies.

Surprisingly, the consensus price target is set at $154.67, and the shares closed Friday way above that at $172.97.

Regeneron Pharmaceuticals

This stock remains one of the favorites among portfolio managers and is another top large cap stock to buy on Wall Street. Regeneron Pharmaceuticals Inc. (NASDAQ: REGN) has been a performance monster over the past two years, and most Wall Street firms expect it to stay one. The company is focused on the development of therapeutic human antibodies for the treatment of eye disorders, hypercholesterolemia, cancer, inflammation and other diseases.

Regeneron’s product sales are driven principally by its VEGF inhibitor Eylea, which is approved for use in wet age-related macular degeneration and diabetic macular edema, and by Praluent for the treatment of hypercholesterolemia.

The company reported a better-than-expected quarterly profit, as U.S. sales of its flagship eye drug Eylea rose 27%. Eylea generated U.S. sales of $831 million in the quarter, topping the consensus estimate of $812 million. Sales are expected to continue a solid upward trend.

Shares closed Friday at $408.63, offering room to run to the consensus price target of $467.45.

These stocks are cheap relative to the S&P 500, and history says they won’t stay that way forever. In fact, the current consensus four-year growth expectations for the large cap biotechs has dipped since 2012 and is currently at the lowest level since 2010. In other words, cheap and somewhat ignored.