In this article, we will take a look at the 10 best Biotech stocks to buy now. You can skip our detailed analysis of the biotech industry’s outlook and go directly to the 5 Best Biotech Stocks To Buy Now.
It has been a remarkable few years for the biotech industry. It took on center stage in the stock market during the pandemic. The interest in the biotech industry was further fueled by the hope that resulted from the successful development of COVID-19 vaccines and treatments. The stock prices in the industry soared through 2020. Post-pandemic, the biotech stock markets started a protracted period of stock price declines in early 2021. The tumbling biotech stocks, however, steadied in May 2022.
While stock valuation in other industries frequently relies on a financial analysis of the business, assessing the stock of a biotech company is a considerably more qualitative exercise. In this industry conducting research and due diligence before making decisions on investments is extremely important. The high-risk, high-reward nature of the biotech industry is because of the prolonged and complicated drug development and approval process. There are several things that investors need to be cautious about, including but not limited to market catalysts, research parameters, prospects, and competitive advantage. Investing in biotech has evident benefits despite these obstacles. There may be chances of the drug or medical device not reaching the market, however, if they do, they can bring in enormous profits. The greater reward is associated with greater risk.
The biotech sector is made up of companies that fuse technology and biology. Companies included in the sector produce a range of products including, medicinal drugs, medical devices, biofuels, biomaterials, environmental controls, medical equipment, diagnostics, and more. Before a product is licensed for commercial manufacturing, it undergoes extensive testing and years of research. There are strict regulatory and compliance frameworks that are instrumental in getting approvals for commercialization. Investors are bullish about this industry for various reasons. Advances in technology have increased understanding of genetics and big data has given rise to precision medicine, which is the wave of the future. With mortality rates increasing in most parts of the world, and the increasing age of the population, chronic care management is a booming industry.
The iShares Biotechnology ETF (IBB) is a passively managed exchange-traded fund created to offer broad exposure to the Healthcare – Biotech sector of the equity market. Sponsored by Blackrock, it has $8.03 billion in assets, making it one of the biggest ETFs. The ETF has stocks such as Gilead Sciences, Inc. (NASDAQ:GILD), Amgen Inc. (NASDAQ:AMGN), and Seagen Inc. (NASDAQ:SGEN).
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Our Methodology
In order to identify the best biotech stocks to buy right now, we are going to use the collective wisdom of nearly 900 hedge funds tracked by Insider Monkey. We started with iShares Biotechnology ETFs nearly 400 holdings and then sorted these stocks by the number of hedge funds with long positions in each stock. Whenever two stocks have the same number of hedge funds, we used the dollar value of total hedge fund holdings as the tie-breaker. So, according to hedge funds, here are the 10 best biotech stocks to buy right now:
10. Moderna, Inc. (NASDAQ:MRNA)
Number of Hedge Fund Holders: 45
Moderna, Inc (NASDAQ:MRNA) is a Cambridge, Massachusetts-based pharmaceutical and biotechnology business that specializes in RNA therapies, particularly mRNA vaccines. The company announced on May 24 that the preclinical trials for the monkeypox vaccines are ongoing.
Moderna, Inc (NASDAQ:MRNA) is simultaneously focusing on its COVID-19 vaccine portfolio and has recently submitted a regulatory application to the FDA in order to obtain Emergency Use Authorization (EUA) for the administration of a 50 microgram booster dose of its bivalent COVID-19 vaccine, mRNA-1273.222, which targets the BA.4/BA.5 omicron and is intended for use in people 18 years of age and older.
The company has a market cap of close to $53.47 billion and estimated annual revenue of $21.89 billion. On August 3, Moderna, Inc. (NASDAQ:MRNA) reported earnings for the fiscal second quarter of 2022. The company reported earnings per share of $5.24 and beat EPS estimates by $0.75. The company reported revenue of $4.75 billion, up 9.07% year over year, and beat revenue consensus by $794.40 million. The company is posting these highs on its strong infectious diseases and immuno-oncology portfolio.
As of August 24, 2022, Theleme Partners is the largest shareholder in Moderna, Inc. (NASDAQ:MRNA) in our database and holds a stake worth $9.07 billion. The investment covers 36.37% of Theleme Partner’s 13F portfolio.
9. Xenon Pharmaceuticals Inc. (NASDAQ:XENE)
Number of Hedge Fund Holders: 48
Based in Burnaby, Canada, Xenon Pharmaceuticals Inc. (NASDAQ:XENE) is a biotech company that focuses on developing innovative treatments for neurological disorders. The product pipeline addresses areas of high unmet medical need.
On August 3, Xenon Pharmaceuticals (NASDAQ:XENE) reported financial results for the second quarter that ended June 30, 2022, and came out with a market cap of $2.30 billion and estimated annual revenue of $15.94 million. The company revealed earnings per share of -$0.55 and missed the EPS estimate by -$0.05. The firm aims to provide patients with novel, distinctive therapy options and is currently focused on the clinical development of drugs for epilepsy and major depressive disorder.
Kurt Von Emster’s VenBio Select Advisor is Xenon Pharmaceuticals Inc. (NASDAQ:XENE)’s largest investor among the funds we track. It owns 4.90 million shares that are worth $152.00 million.
8. United Therapeutics Corporation (NASDAQ:UTHR)
Number of Hedge Fund Holders: 49
United Therapeutics Corporation (NASDAQ:UTHR) is a biotech company that develops therapies for chronic and life-threatening diseases. The firm has a market cap of $9.80 billion and estimated annual revenue near $1.92 billion. United Therapeutics has a special focus on lung diseases and organ manufacturing. The company’s distinctive product Tyvaso (treprostinil), which is indicated for pulmonary arterial hypertension, is undergoing clinical trials to assess its effectiveness in treating idiopathic pulmonary fibrosis (IPF). By 2028, it is anticipated that the market for idiopathic pulmonary fibrosis would have grown to $5.32 billion.
At the end of the second quarter of 2022, 49 hedge funds in the database of Insider Monkey held stakes in United Therapeutics Corporation (NASDAQ:UTHR). Among the hedge funds being tracked by Insider Monkey, VenBio Select Advisor is a leading shareholder in United Therapeutics Corporation (NASDAQ:UTHR), with 2.97 million shares worth more than $699 million.
7. IQVIA Holdings Inc. (NYSE:IQV)
Number of Hedge Fund Holders: 53
IQVIA Holdings Inc. (NYSE:IQV), is an American multinational that provides services to the clinical research and health information technology sectors. As of August 25, 2022, Farallon Capital owned a $697.00 million stake in IQVIA Holdings Inc. (NYSE:IQV), representing 4.29% of the total 13F portfolio.
Dan Leonard, an analyst at Credit Suisse, maintained IQVIA Holdings Inc. (NYSE:IQV), at Outperform rating with a price target of $30. Iqvia’s integrated data, technology, and research capabilities, in the analyst’s opinion, “will continue to fuel industry-leading sales growth.”
According to Insider Monkey’s Q2 data, IQVIA Holdings Inc. (NYSE:IQV) was found in the public stock portfolios of 53 hedge funds, with collective stakes in the company worth $2.81 billion.
Here is what Cooper Investors has to say about IQVIA Holdings Inc. (NYSE:IQV) in its Q4 2021 investor letter:
“During the quarter, IQVIA held an Investor Relations day. Today IQVIA is a leading provider of technology solutions and clinical research services to the life science industry. The portfolio first invested in the IQVIA predecessor IMS Health in late 2015. IMS Health was taken private by private equity in 2010 and re-listed in 2014. Current CEO Ari Bousbib, a former executive at United Technologies was appointed CEO at its privatization and has been the driving force ever since.Under Ari’s watch IMS first transformed itself from a drug prescription data business to a broader pharmaceutical services provider and then in 2016 merged with Quintiles, the leading Contract Research Organisation (CRO), a business that runs drug trials for pharmaceutical and biotech companies. This merger created the IQVIA we know today. While this was a merger on the surface it was anything but as IMS effectively took control of Quintiles with no premium paid, another in the long line of savvy moves made by Ari and the team.Along the journey IQVIA management has consistently increased growth rates and expanded the opportunity set for the company. This is a highly commercial team that has built or sought out great quality businesses in attractive and growing life science markets. IMS was an ex-growth business in 2010 and by the time of the Quintiles merger had accelerated to low-to-mid single digits. With the addition of Quintiles and improvement across all aspects of the business revenue growth has been averaging high-single-digits.At the IR day management now talked to a double-digit revenue growth opportunity. Their markets are growing as fast as they have ever been as more capital flows into biotech and life sciences development. While we have owned the shares for over six years, the business outlook today is the strongest we’ve ever seen it and IQVIA remains a core position.”
6. Biogen Inc. (NASDAQ:BIIB)
Number of Hedge Fund Holders: 54
Biogen Inc. (NASDAQ:BIIB), an American multinational biotechnology company headquartered in Cambridge, Massachusetts, was established in 1978. It has since dominated the discovery, development, and distribution of therapies for the treatment of neurological diseases. The firm has a market value of $28.81 billion and an estimated annual revenue of $10 billion.
Maintaining its stronghold on neurological diseases, the company has various drugs in the pipeline. In July, the New Medication Application (NDA) for the investigational drug tofersen submitted by Biogen for the treatment of amyotrophic lateral sclerosis (ALS) was granted priority evaluation by the US Food and Drug Administration (FDA). Additionally, a topline readout of data from the CLARITY-AD trial in Alzheimer’s is due in late September.
In July, Truist analyst Robyn Karnauskas decreased the price target on Biogen (NASDAQ:BIIB) from $320 to $270, maintaining its ‘Buy’ rating.
As of August 25 2022, Renaissance Technologies is the largest shareholder in our database in Biogen (NASDAQ:BIIB) and holds a stake worth $315 million in the company.
In addition to Biogen Inc. (NASDAQ:BIIB), the iShares Biotechnology ETF (IBB) also includes stocks such as Gilead Sciences, Inc. (NASDAQ:GILD), Amgen Inc. (NASDAQ:AMGN), and Seagen Inc. (NASDAQ:SGEN) that are widely held among the elite funds we track.
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Disclosure: None. 10 Best Biotech Stocks To Buy Now is originally published on Insider Monkey.
