Healthcare Business

Jefferies Has 4 Red-Hot Biotech Stock Picks for December


This is another biotech/medical technology stock that Jefferies recently started coverage on with a Buy rating. Axogen Inc. (NASDAQ: AXGN) offers surgical solutions for peripheral nerve injuries. The company provides products and education to improve surgical treatment algorithms for peripheral nerve injuries. Its portfolio of products includes Avance Nerve Graft, AxoGuard Nerve Connector, AxoGuard Nerve Protector and Avive Soft Tissue Membrane.

The company also offers the AxoTouch Two-Point Discriminator and AcroVal Neurosensory and Motor Testing System. These evaluation and measurement tools assist health care professionals in detecting changes in sensation; assessing return of sensory, grip and pinch function; evaluating treatment interventions; and providing feedback to patients on nerve function.

Jefferies is very positive on the shares and noted this:

Axogen targets an underserved nerve repair market, a $2.2 billion opportunity and market that is just 3% penetrated, Historically, nerve injuries were repaired using nerves harvested from the patient’s body. The company offers off-the-shelf tissue products for nerve repair and estimates there are over 900k injuries a year that could be treated with its products. The clinical community is also finding new uses for Axogen’s products which offers upside to current forecasts. We forecast growth in the 35-40% range through 2021 at least.

The $35 Jefferies price target is well above the consensus price objective of $27.17. The shares ended last week at $26.40 apiece.

Intercept Pharmaceuticals

This biotech story has stayed out front on Wall Street for years. Intercept Pharmaceuticals Inc. (NASDAQ: ICPT) is a biopharmaceutical company focused on the development of treatment for chronic liver disease using its expertise in bile acid chemistry. The lead product candidate, obeticholic acid (OCA), is approved for the treatment of primary biliary cirrhosis (PBC) and in Phase 3 trials for the larger nonalcoholic steatohepatitis (NASH), a common but often “silent” liver disease.

The Jefferies analysts had this to say about the prospects for the company going forward:

There have been safety concerns around the Primary Biliary Cholangitis (PBC) franchise, but we don’t believe the drug will be removed from the market and we believe PBC is at least a $300 million indication, which suggests that the stock gets little credit for NASH. NASH could be $1 billion to $2 billion in sales and the market cap of the company as a whole is only $1.5B. Discussions with management suggest that a label revision could come by early 2018 and if changes aren’t that bad, such an event could help remove the overhang. Interim NASH analysis comes in the first half of 2019.

Jefferies has put a stunning $135 price target on the stock. That compares with the consensus target of $132.47. The stock was last seen trading at $61.21 per share.

These hot momentum plays are designed for aggressive accounts with big risk tolerance so it makes sense to apply capital accordingly. That said, they all have big upside and any one could be the proverbial home run.