2019’s torrent of mergers and acquisitions, positive trial results and regulatory progress has seen the biotech index boom. So far the NASDAQ Biotechnology Index is up 13.3% since the start of the year. Delivering more growth have been Q3 earnings results from Alexion Pharmaceuticals, Biogen and Amgen - all beating expectations.
Amount the NASDAQ Biotechnology Index is up since start of 2019
Here are five biotech stocks traders should be watching.
Bristol-Myers Squibb Company
Bristol-Myers Squibb's [BMY] share price is up 10.6% this year, having rallied 35.5% since 22 July, where it was trading at a year low. Kick starting the year for BMY was the announcement of a $74 million mega-merger with Celgene, which caught investors’ attention. Progress in its chemotherapy treatments has also helped BMY’s share price gain.
However, third-quarter earnings in October were a mixed bag. While revenue increased 6% to $5.7 billion, topping analyst expectations, earnings came in at $0.83 a share - a sharp decline from the $1.16 seen in the same quarter last year.
Is this enough to put the brakes on the stock in the mid- to long-term? Analysts don’t think so, having pinned an average price target of $64.22 on the stock, which would deliver a 9.7% upside on BMY’s current share price.
Celgene's [CELG] share price has been one of the stand out performers in the biotech index. Since the start of the year, the stock has shot up 64.2%, boosted by the merger with BMY. When that deal is complete at the end of the year/early 2020, it is expected to deliver more than $45 million in free cash flow generation in the first three years alone.
However, analysts have pegged a $103.4 price target on the stock, which would see a 5.5% drop on the current share price. Baird also lowered its ratings to Neutral from Outperform. In its analysis, Baird said recent price gains made the stock expensive ahead of completing the BMY deal.
Intra-Cellular Therapies’ [ITCI] share price has dropped over 20% since the start of the year. The stock has been volatile this year, dropping sharply in both July and September.
Yet, Cantor Fitzgerald analyst Charles Duncan believes the end of 2019 and early 2020 will be transformational for Intra-Cellular Therapies. Lumateperone, the drugmaker’s antipsychotic treatment, is through the FDA approval process, with a potential first-quarter 2020 release.
Among the nine analysts covering Intra-Cellular Therapies, the stock carries a $25.2 price target. Hitting this would represent a huge 116.3% upside on the current share price.
Moderna's [MRNA] share price is up just over 14% since the start of the year. However, since its year high of $28.42 in early May, the stock has plummeted almost 40%.
Yet Roth Capital analyst Yasmeen Rahimi has faith in Moderna’s stock. Rahimi has a $54 price target, which would see a 37% return on the current share price. Rahimi points to Moderna's solid financials and product pipeline as reasons for backing the stock.
Other analysts are even more bullish. On Yahoo Finance, the stock carries a $29.83 average price target, a huge 71% gain on the current price.
Revance Therapeutics’ [RVNC] share price is down 22% since the start of the year. However, Wall Street is bullish on Revance Therapeutics future, with Wells Fargo upgrading its rating on the stock from 'Market Perform' to 'Outperform' in October. Potentially adding to revenue next year will be its treatment for glabellar (frown) lines, which Revance say is on course for FDA approval.
Of the nine analysts tracking the stock on Yahoo Finance, eight rate it a Buy, and one rates it a Strong Buy. The consensus price target is $35.56, a mammoth 131% upside if hit.