Although markets have pulled back so far in September, many are viewing this as a technical correction, as the markets ran very hot in a very strong August. Market corrections happen regularly, and it should not discourage investors from buying the dip or even pulling their money out. Despite this pullback, one sector is looking to take off in the latter part of this year and even into 2020.
The health care sector, some biotech stocks in particular, are looking to explode in 2021. The iShares Nasdaq Biotechnology ETF (NASDAQ: IBB) is only up about 7% year to date and 26% in the past 52 weeks. There have been some breakout companies as a result of the coronavirus pandemic, but other catalysts will be playing into the expected gains as well.
Practically any company attempting almost anything COVID-19 related has seen massive gains. However, other big winners in the industry are not tied to the pandemic, and there are likely more to come for the rest of the year and even into next year.
Remember that biotechs offer big risk but big rewards as well. These are seen as some of the more speculative companies in the market because a single clinical trial could be either a huge sunk cost or the next blockbuster drug.
24/7 Wall St. has compiled a list of some biotech companies that could see massive gains in the coming months. Remember that no single analyst call should ever be used as a sole reason to buy or sell a stock, but they do offer insight when doing research on these individual stocks.
Despite a history of not pleasing investors, there are a lot of positive trends currently going on with Alexion Pharmaceuticals Inc. (NASDAQ: ALXN) that could be viewed favorably in the months ahead. Low valuations, continued growth, beating earnings, raising guidance, activist investors, loose merger hopes, an expanded and diversified drug pipeline and higher analyst price targets just might all add up to something for longer-term investors.
Activist firm Elliott Management has noted rumors of an Amgen deal and said that the best return for shareholders would be from an acquisition of the entire company. While an acquisition may bring upside, there may be concerns of slower growth derived from a history of underwhelming acquisitions. In short, Amgen might not want to pay a premium for a company that hasn’t made great work of its own expensive deal-making in recent years. While most investors love to hear that a potential acquisition may be the case, the reality is that investors should never view a company solely because it could see an acquisition down the road.
SVB Leerink has an Outperform rating and a $163 price target, the highest target on Wall Street. Other notable analysts have made similar calls. Raymond James reiterated an Outperform rating with a $151 price target, and SunTrust Banks reiterated a Buy rating with a $155 price target.
Alexion Pharmaceuticals stock closed Wednesday at $108.28 a share, in a 52-week range of $72.67 to $121.50. The consensus price target is $141.32.
Biogen Inc. (NASDAQ: BIIB) has been range-bound for five years and has a $43 billion market cap. The consensus price target of $305.39 implies over 10% upside from the current price. While Biogen has led the way in multiple sclerosis treatments for years, the big upside catalyst, if it gets approved, will be the Alzheimer’s treatment, as there are no current drugs approved by the FDA that actually help treat or slow the progression. That is far from a certain outcome here, and it was once ruled as “dead on arrival” but any Alzheimer’s treatment approved by the FDA is probably guaranteed to bring untold additional billions in sales.