Analysts Have 12 Top Biotech Picks for Big Upside in 2018
This stock looks to be breaking out through a triple top formation. Array BioPharma Inc. (NASDAQ: ARRY) is a biopharmaceutical company focused on the discovery, development and commercialization of targeted small molecule drugs to treat patients afflicted with cancer. Its programs include these three cancer drugs: binimetinib, encorafenib and selumetinib (partnered with AstraZeneca).
Binimetinib and encorafenib are in Phase 3 trials in advanced cancer patients, including the COLUMBUS trial studying encorafenib in combination with binimetinib in patients with BRAF-mutant melanoma and has initiated BEACON CRC trial to study encorafenib in combination with binimetinib and cetuximab in patients with BRAF V600E-mutant colorectal cancer.
The SunTrust and Wall Street consensus price target are both $16, and the shares closed Friday at $12.80.
Jefferies recently started cover on this biotech/medtech 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.
The Jefferies team is very positive 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 higher than the consensus price objective of $28.17. The shares ended last week at $28.30.
This large cap biotech will partner with Samsung Bioepis in the biosimilar world. Biogen Inc. (NASDAQ: BIIB) discovers, develops and delivers to patients worldwide innovative therapies for the treatment of neurodegenerative diseases, hematologic conditions and autoimmune disorders. Founded in 1978, Biogen is one of the world’s oldest independent biotech companies, and patients worldwide benefit from its leading multiple sclerosis (MS) and innovative hemophilia therapies.
The company markets three products, Avonex, Tysabri and Tecfidera, that combined have the leading share of the worldwide $18 billion MS market. Merrill Lynch feels the company will be a big winner with the lower corporate tax rate as it has extensive operations in the United States.
Merrill Lynch has set its price objective at $365. The consensus price target is $362.73, and shares were last seen at $318.57.
This off-the-radar name is a top pick for 2018 in health care at Wedbush. CytomX Therapeutics Inc. (NASDAQ: CTMX) is an oncology-focused biotech company developing a proprietary “Probody” technology to treat cancer. Probodies are specifically activated in the tumor microenvironment to provide enhanced tumor specificity and safety profile. The company has established multiple partnerships that validate the technology.
The analyst feels that 2018 will be a catalyst-rich year with first-in-human data from wholly owned Probody candidates in the first half of the year. The company ended the third quarter of 2017 with $331.3 million in cash, cash equivalents and short-term investments, sufficient to fund operations into 2020. Partnered products with Bristol Myers and AbbVie should enter the clinic in 2018, and most are encouraged by progress of the partnered assets.
The $37 Wedbush price objective compares with the consensus estimate of $33.33. The shares closed trading on Friday at $21.11.
This stock is trading a very reasonable 10.6 times estimated 2018 earnings. Gilead Sciences Inc. (NASDAQ: GILD) is a biopharmaceutical company that discovers, develops and commercializes therapies for the treatment of HIV/AIDS, liver disease, cancer and inflammation. The recent acquisition of KITE allows for entry into the CAR-T space, indicating a renewed focus in oncology.
The company’s products include Stribild, Complera/Eviplera, Atripla, Truvada, Viread, Emtriva, Tybost and Vitekta for the treatment of human immunodeficiency virus (HIV) infection in adults; and Harvoni, Sovaldi, Viread and Hepsera products for the treatment of liver disease.
Gilead also has a large pile of cash overseas, which the analysts feel could come back stateside with the new low repatriation rate.
Shareholders receive a 2.87% dividend. JPMorgan has a price objective of $83, but the consensus target price is higher at $85.50. The stock closed Friday at $71.64 a share.
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 a stunning $135 price target. The consensus target is $127.65, and the stock closed Friday’s trading at $58.42, down almost 7% on the day.