In this article, we’re going to talk about the 10 best QQQ stocks to buy according to analysts.
Navigating High Valuations and Stock Opportunities
Several recent discussions have focused solely on the implications of the Fed’s recent rate cut for the market. Analysts have noted that smaller interest rate reductions are expected as the Fed adopts a long-term perspective on monetary policy. Despite earlier recession predictions, there is a bullish outlook for the market now.
Economic data indicates strong growth. The current environment is characterized as stable, suggesting that additional quarter-point cuts could be beneficial. Just as October began, Richard Fisher, Jefferies’ senior advisor, joined CNBC to make a discussion on the concerns about whether current rates are too restrictive, with arguments that financial conditions remain supportive. We covered this in detail in our 10 Most Undervalued Quality Stocks To Buy According To Analysts article, here’s an excerpt from it:
“He highlighted the significance of recent economic data, particularly from the Atlanta Fed, which indicates strong growth above 3%. Fisher characterized the current economic environment as experiencing neither a soft landing nor a hard landing, but rather a smooth glide path. He believes that two more quarter-point cuts would be appropriate to maintain this trajectory. When discussing concerns about whether current rates are too restrictive relative to inflation, Fisher disagreed with the argument and pointed out that financial conditions remain accommodative, citing narrow spreads and strong private lending activity. He argued that with another two cuts, the Fed would not be overly restrictive.”
Analysts caution against declaring victory regarding economic stability too soon. The ongoing evaluation of monetary policy will continue until 2026. Under a similar discussion, Michael Kantrowitz, chief investment officer at Piper Sandler, joined CNBC on October 14 to discuss the outlooks on overvalued markets, as he thinks that over-valuation is no reason to get bearish.
The financial markets marked the second anniversary of the ongoing bull market, which has seen stock prices rise at the second-fastest pace since 1950. Michael Kantrowitz noted that while markets may appear expensive, this does not necessarily warrant a bearish outlook unless new risks emerge. Kantrowitz emphasized that many valuation models have indicated that the market has been expensive for some time, but he believes it is essential to understand the catalysts driving these valuations.
He explained that the significant rise in market multiples over the last two years can largely be attributed to the pricing out of risks that were prevalent two years ago, such as inflation and high interest rates. Kantrowitz stated that these concerns have largely been factored into equity prices, which is why the market is where it is today. He argued that an expensive market alone is not a reason to adopt a bearish stance; instead, potential spikes in interest rates or renewed inflation fears could trigger such a sentiment. Currently, however, he sees no immediate threats on the horizon.
When discussing sector performance, Kantrowitz clarified that his focus is less on broad sectors and more on individual stocks with strong earnings momentum. He acknowledged that while sectors like technology may appear expensive overall, there are still individual stocks within those sectors that continue to show earnings growth. He stressed the importance of earnings revisions as a key factor in stock selection and portfolio construction.
Addressing concerns about rising bond yields, Kantrowitz acknowledged that higher yields could pose challenges for equity markets. He recalled how earlier in the year when ten-year Treasury yields rose from around 3.80% to approximately 4.30%, equity markets initially remained stable but began to feel pressure as rate-sensitive stocks started underperforming. He noted that utilities and real estate sectors had benefited from lower rates but were now facing challenges as rates increased.
Kantrowitz also commented on various economic indicators suggesting mixed signals in the market. For instance, he mentioned metrics like rail freight carloads and corporate misery indices indicating weak demand. However, he cautioned against overreacting to these indicators, noting that downward earnings revisions are common as companies adjust their forecasts throughout the year. Historically, Q4 tends to see significant downward revisions as companies align their expectations with actual performance.
In the current economic climate, characterized by uncertainty and mixed signals, the importance of quality stocks cannot be overstated. Quality stocks, those with strong earnings momentum and resilient business models, are particularly well-positioned to navigate these turbulent times. As concerns about rising interest rates and inflation persist, investors may find that high-quality companies with solid balance sheets and consistent profitability can offer a buffer against volatility. That being said, we’re here with a list of the 10 best QQQ stocks to buy according to analysts.
Methodology
We first sifted through the Invesco QQQ exchange-traded fund (ETF) holdings to find the ones with an upside potential of over 25% as of October 14, 2024. We then selected 10 stocks with the highest upside potentials that were also the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of their analysts’ upside potential.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best QQQ Stocks to Buy According to Analysts
10. CoStar Group Inc. (NASDAQ:CSGP)
Average Upside Potential: 27.84%
Number of Hedge Fund Holders: 42
CoStar Group Inc. (NASDAQ:CSGP) provides commercial real estate information, analytics, and online marketplaces for real estate transactions, with research services that include online services and research for the rental home and hotel industry. Its extensive network and deep industry expertise have made it a trusted source for real estate professionals worldwide.
The company has a portfolio of 27+ internationally recognized brands, including industry-leading names like Apartments.com, attracting over 100 million unique monthly visitors, and Homes.com. 95% of the revenue is derived from subscriptions and there’s an impressive 90% renewal rate for contracts exceeding one year.
During the second quarter of 2024, revenue was up 11.87% year-over-year. It hit the milestone of a record 183 million monthly average unique visitors. The commercial information and marketplace businesses delivered 41% profit margins in the quarter.
Apartments.com revenue increased 18%, with unaided brand awareness up 74% and average monthly unique visitors up 3%. Lender product net new sales surged by 47%, and the number of banks and lending institutions on the platform increased by 50%. Revenue from benchmarking and subscriptions grew 28% year-over-year. The subscriber overall base grew by 19%.
Other than that, LoopNet revenue increased by 7%. Real Estate Manager revenue was up 9% due to strong renewal rates. Land.com revenue increased by 5% due to signature ads and diamond ads. sales grew significantly. BizBuySell revenue rose by 6% as franchise directory and listing leads grew.
While the company’s core business is exposed to the cyclical nature of the commercial real estate market, CoStar Group Inc. (NASDAQ:CSGP) has a strong balance sheet and a high-margin business model that can drive consistent value creation. Its competitive edge in commercial real estate makes it an attractive choice for investors.
Weitz Investment Management Partners III Opportunity Fund stated the following regarding CoStar Group, Inc. (NASDAQ:CSGP) in its Q2 2024 investor letter:
“Liberty Media Corp.-Liberty SiriusXM (LSXMK) (83% owner of Sirius XM Holdings, Inc. (SIRI)) and CoStar Group, Inc. (NASDAQ:CSGP) were also top detractors for the quarterly and year-to-date periods. At CoStar, the recently launched residential real estate portal (Homes.com) generated strong initial sales results and drove healthy stock price appreciation in the first quarter. Recent reports, however, suggest the pace of real estate agents buying memberships to their site may have slowed, causing shares to give back prior quarter gains and then some. Progress for this new business vertical will likely continue in fits and starts, but importantly, our investment thesis is principally underwritten by CoStar’s existing and dominant commercial real estate and multifamily rental marketplace businesses. From current prices, eventual success at Homes.com represents potential upside optionality.”
9. ASML Holding (NASDAQ:ASML)
Average Upside Potential: 27.99%
Number of Hedge Fund Holders: 81
ASML Holding (NASDAQ:ASML) is a leading manufacturer of chip-making equipment, designing and manufacturing lithography machines, an essential component in chip manufacturing. Its innovative technology and advanced manufacturing capabilities have made it a dominant player in the semiconductor industry with products used by major chip manufacturers worldwide to produce cutting-edge microchips for various applications, including smartphones, computers, and data centers.
Despite a strong track record of 18.42% average annual revenue growth over the past decade, the company is facing challenges in 2024 due to cautious customer spending, supply chain disruptions, and economic uncertainties. For this reason, the revenue dropped 11.69% year-over-year. Logic and Memory improvements and better inventory management were the main drivers of the remaining revenue. Earnings per share for the quarter stood at $4.39.
The company enjoys a unique position as the exclusive provider of EUV and high NA EUV lithography machines, essential for producing advanced 5nm, 3nm, and 2nm chips. This technological monopoly gives it a significant competitive advantage. Its innovative lithography systems are critical for the production of advanced microchips, powering the growth of AI and other cutting-edge technologies. The recent breakthroughs in EUV technology, combined with strong demand across various industries, position it for continued success in the semiconductor market.
While 2024 is a transitional year with no expected revenue growth, the company is gearing up for a record-breaking 2025, projecting revenue between $33.17 billion and $44.2 billion. This forecast seems reasonable considering the company’s impressive historical growth, averaging 19% top-line and 24% bottom-line growth over the past 5 years.
Baird Chautauqua International and Global Growth Fund stated the following regarding ASML Holding N.V. (NASDAQ:ASML) in its Q3 2024 investor letter:
“ASML Holding N.V. (NASDAQ:ASML): After a 35% price appreciation in 1H24 and a beat in 2Q24 numbers, investors are apprehensive about Intel capex cuts, potential memory weakness, and a less clear cyclical recovery pace in 3Q24 and potentially 2025. We remain positive on long-term demand for ASML’s products due to industry supply/demand factors for computing power.”
8. Adobe Inc. (NASDAQ:ADBE)
Average Upside Potential: 28.17%
Number of Hedge Fund Holders: 107
Adobe Inc. (NASDAQ:ADBE) offers web design tools, photo manipulation, and vector creation, through video/audio editing, mobile app development, print layout, and animation software. For its flagship products like Photoshop, Illustrator, and Acrobat, the company is a leader in the digital media and content creation industries. The software is used by professionals and individuals alike to design, edit, and manage various types of digital content, including graphics, videos, and documents.
The company reported solid FQ3 2024 results, with revenues reaching $5.41 billion, a 10.59% increase year-over-year. The Digital Media segment fueled this growth with a 12% increase, while the Digital Experience segment grew 12%. Its subscription-based model remains a key strength, contributing $5.18 billion or 96% of total revenue. Adobe Inc. (NASDAQ:ADBE) earned $4.65 per share in the quarter. It has a market share of over 80% in graphic design because it has been developing products for many years.
AI features like Adobe Firefly have played a significant role in enhancing customer engagement and retention. Document Cloud sales reached $807 million in FQ3, an 18% year-over-year increase. While the growing popularity and affordability of AI tools pose potential challenges, its substantial investments in AI development are aimed at maintaining its competitive edge. The successful integration of AI into its products, such as Creative Cloud, Document Cloud, and Experience Cloud, has led to increased adoption and usage.
The company is poised to capitalize on AI through its generative credits model. On October 14, it launched its Firefly Video Generator, a new video generation tool powered by its Firefly AI platform, where users can create AI-generated videos. It also showcased collaborations with major brands like PepsiCo and Mattel who are using Adobe’s AI technology for personalized packaging and customer experiences.
Polen Global Growth Strategy stated the following regarding Adobe Inc. (NASDAQ:ADBE) in its Q2 2024 investor letter:
“With Adobe Inc. (NASDAQ:ADBE), in some ways, we see it as a microcosm of the market’s “shoot first, ask questions later” approach to categorizing AI winners and losers. In the early part of last year, Adobe came under pressure with a perception that generative AI (GenAI) would represent a material headwind to their suite of creative offerings. In short order, the company introduced its GenAI offering, Firefly, which shifted the narrative to Adobe as a beneficiary with a real opportunity to monetize GenAI in the near term. Earlier this year, that narrative was again challenged as the company reported a slight slowdown in revenue growth. Results in the most recent quarter were robust as the company raised its full-year forecast across a number of key metrics and showcased better-than-expected results.”
7. Microchip Technology Inc. (NASDAQ:MCHP)
Average Upside Potential: 28.24%
Number of Hedge Fund Holders: 46
Microchip Technology Inc. (NASDAQ:MCHP) is a leading provider of microcontroller, mixed-signal, and analog semiconductors that offers a range of products that are used in applications like automotive, industrial, consumer, and communications. Its focus on delivering reliable and high-performance solutions has made it a trusted partner for many industries.
The company’s revenue declined 45.76% as compared to a year-ago period in FQ1 2025, with a 6.4% sequential decrease. Despite missing estimates, the total revenue recorded was still $1.24 billion, with $0.53 in earnings per share. Although quarterly bookings grew close to 50% in the June quarter as compared to the March quarter, overall bookings were still below management’s expectations.
The drop in sales is attributed to a significant inventory correction. Several factors contributed to this inventory adjustment, including a weak macro environment characterized by high interest rates, short lead times, and an uncertain business outlook. Customers at various levels of the supply chain, from direct customers to contract manufacturers and distributors, have been reducing their inventory levels to adjust to the weaker market conditions.
Its recent launch in October of the LAN969x Multi-Gigabit Ethernet Switches and VelocityDRIVE Software Platform provides OEMs with a complete Ethernet solution. The VelocityDRIVE platform, featuring a user-friendly configuration tool based on standardized YANG models, is a groundbreaking innovation as the first to incorporate CORECONF YANG.
The company is well-positioned for future growth thanks to its strategic investments in high-margin products and acquisitions like VSI and Neuronix AI Labs. These moves enhance its capabilities in automotive networking and AI-enabled edge solutions, key areas for data center applications. Combined with its solid financial metrics and ongoing commitment to capital returns, Microchip Technology Inc. (NASDAQ:MCHP) presents a compelling investment opportunity in the data center sector.
Aristotle Capital Value Equity Strategy stated the following regarding Microchip Technology Incorporated (NASDAQ:MCHP) in its Q3 2024 investor letter:
Microchip Technology Incorporated (NASDAQ:MCHP), the microcontroller (MCU) and analog semiconductor producer, was a primary detractor for the period. The company reported results in line with guidance, but its short-term outlook remains challenged. Between 2021-2023, amid a global chip shortage, Microchip implemented a preferred supply program to meet the large demands of its clients, who overestimated their needs and are now working through their inventory levels. While management has started to see some positive signs pointing toward a recovery (e.g., higher expedited orders and fewer order cancelations), it is taking longer than anticipated. Longer term, Microchip has been able to generate 15+ years of robust FREE cash flow and margins, while lowering its debt and consistently returning money to shareholders. This, we believe, speaks to the company’s proven ability to manage the business through economic cycles, while taking advantage of its broad portfolio to continue gaining share in areas including IoT, 5G infrastructure, autonomous driving and data centers.
6. DexCom Inc. (NASDAQ:DXCM)
Average Upside Potential: 33.65%
Number of Hedge Fund Holders: 64
DexCom Inc. (NASDAQ:DXCM) develops, manufactures, produces, and distributes continuous glucose monitoring systems for diabetes management. Its CGM (continuous glucose monitoring) systems use a small sensor that is inserted under the skin to continuously measure glucose levels and transmit the data to a compatible device, such as a smartphone or watch, allowing users to monitor their blood sugar trends, make informed decisions about insulin dosing, and improve overall diabetes management.
The company exceeded expectations with earnings per share of $0.43 in Q2 2024. Although revenue of $1 billion fell short of the estimated $1.04 billion, it still showed 15.26% year-over-year growth. International revenue grew 7%. Its continuous technological advancements in CGM and its increasing market share in the healthcare sector demonstrate its strength in a rapidly evolving industry.
Similar to Insulet, which offers insulin delivery systems, DexCom Inc.’s (NASDAQ:DXCM) devices enable round-the-clock glucose monitoring. This gives it a strong competitive advantage in a relatively stable market. However, the company’s reliance on disposable sensors (94% of revenue) and distributors (85% of H1 2024 revenue) exposes it to potential risks from competitors and supply chain disruptions. The launch of Stelo, its first over-the-counter nonprescription glucose biosensor, is a major catalyst for growth in Q2.
Despite facing competition from industry peers and concerns about market demand, the company’s innovative products and technology offer significant potential for growth. Its ability to differentiate its offerings and adapt to changing market conditions will be crucial for its future success.
The company offers significant potential for growth in the rapidly expanding diabetes market. However, recent challenges, including increased competition and concerns about GLP-1 drugs, have impacted its stock performance. Still, DexCom Inc. (NASDAQ:DXCM) remains a promising investment.
Ithaka US Growth Strategy stated the following regarding DexCom, Inc. (NASDAQ:DXCM) in its Q2 2024 investor letter:
“DexCom, Inc. (NASDAQ:DXCM is a medical device company focused on the design, development, and commercialization of continuous glucose monitoring (CGM) systems, primarily for people with diabetes. Diabetes is a chronic, life-threatening disease for which there is no known cure. DexCom’s CGM system is superior to traditional fi nger-stick tests because it provides users with continuous data (including glucose trends and time spent in hyper or hypoglycemia) versus a snapshot in time. Dexcom’s stock suffered despite a solid earnings announcement that beat Street expectations across the board. The fall in the stock price was likely due to missing elevated buy-side expectations following multiple quarters of accelerating fundamental growth.”
5. Globalfoundries Inc. (NASDAQ:GFS)
Average Upside Potential: 34.64%
Number of Hedge Fund Holders: 21
Globalfoundries Inc. (NASDAQ:GFS) is a semiconductor contract manufacturing and design company that specializes in producing integrated circuits (ICs) of various technologies, including leading-edge and mature nodes. It operates manufacturing facilities around the world and serves a diverse customer base, including major chip designers and technology companies.
The acquisition of Tagore Technology’s GaN IP portfolio aligns with its strategy to address the growing demand for high-power GaN devices in sectors like automotive, IoT, and AI data centers. This technology enhances efficiency and performance in these applications. The company’s recent $1.5 billion funding through the US CHIPS and Science Act will support the domestic high-volume manufacturing of GaN chips, further strengthening the company’s position in the power semiconductor market.
Despite recording a revenue of $1.63 billion in Q2 2024, beating analyst expectations, the company saw an 11.54% revenue decline in the quarter. The decline was attributed to weak demand in key segments such as Communications Infrastructure, Data Centers, and lower-end Consumer and Home Electronics. Additionally, the company faced challenges from broader macroeconomic conditions, geopolitical instability, and elevated inventory levels in the semiconductor industry. However, there were some positive developments, such as higher average selling prices and growth in the automotive segment.
In early September, it formed a strategic partnership with Silicon Catalyst, a renowned startup incubator. This collaboration aims to foster innovation and accelerate the development of next-generation semiconductor solutions. By providing startups with access to the company’s advanced technology and expertise, the partnership will empower them to create cutting-edge chips for applications like AI, automotive, and IoT.
Despite challenges, Globalfoundries Inc.’s (NASDAQ:GFS) rebound in revenue from the automotive industry and its potential for future growth in emerging technologies like AI and 5G make it a compelling investment opportunity.
4. Micron Technology Inc. (NASDAQ:MU)
Average Upside Potential: 35.62%
Number of Hedge Fund Holders: 120
Micron Technology Inc. (NASDAQ:MU) is a global semiconductor company that specializes in memory and storage solutions. It’s a major manufacturer of DRAM and NAND flash memory, which are essential components in a range of electronic devices. These products are used in everything from smartphones and computers to data centers and servers.
In the closing fiscal fourth quarter of 2024, it generated $7.75 billion in revenue, a 93.27% increase from the previous year. This growth was fueled by record revenues from NAND and storage business units, driven by strong demand in the data center and automotive industries.
On October 15, it launched new high-speed memory (CUDIMM & CSODIMM) for next-generation PCs, especially AI PCs. These are twice as fast as previous DDR4 memory and offer improved stability. This innovation is validated by Intel and will be available in 16GB capacity soon.
It launched a new high-performance SSD with read/write speeds of 7,100/6,000 MB/s and capacities up to 2TB. This new drive is compatible with PCs, laptops, and PlayStation 5. Micron Technology Inc. (NASDAQ:MU) has also qualified its 1-beta-based 16Gb LP5 DRAM for the automotive market, offering 9.6 Gbps speed for AI advancements. While the automotive industry is adjusting to changing customer demand, this company expects automotive growth to resume in the second half of fiscal 2025.
The company is surging in popularity and outperforming the market. This chipmaker boasts impressive recent gains and operates within a booming industry. The key driver for long-term growth is the rising earnings estimates. As analysts become increasingly bullish on its future profitability, the stock price is poised to follow suit, making Micron Technology Inc. (NASDAQ:MU) an attractive investment opportunity.
Baird Chautauqua International and Global Growth Fund stated the following regarding Micron Technology, Inc. (NASDAQ:MU) in its Q3 2024 investor letter:
“After Micron Technology, Inc.’s (NASDAQ:MU) price appreciated 54% in 1H24, investors became anxious about potential memory weakness, less clear cyclical recovery pace, and whether competitor Samsung will act rationally with capacity expansion. We maintain our long-term positive view on the industry’s demand/supply situation. We believe Micron is well positioned in technology capability, and that its margins will continue to improve.”
3. Moderna Inc. (NASDAQ:MRNA)
Average Upside Potential: 40.68%
Number of Hedge Fund Holders: 39
Moderna Inc. (NASDAQ:MRNA) is a pharmaceutical and biotechnology company that focuses on RNA therapeutics, primarily mRNA vaccines. These vaccines use a copy of a molecule called messenger RNA to carry instructions for proteins to produce an immune response. It is best known for its COVID-19 vaccine, which was developed at record speed and played a crucial role in combating the global pandemic.
The company plans to file for approval of 3 new products this year: a new COVID/flu vaccine, a next-gen COVID vaccine, and an RSV vaccine for adults aged 18-59. While the RSV vaccine rollout and positive EMA opinion boost investor confidence, its broader product pipeline also shows promise, with positive Phase III results for the flu/COVID-19 combo vaccine and alliances with BARDA and Mitsubishi Tanabe Pharma.
Moderna Inc. (NASDAQ:MRNA) plans to discontinue five R&D programs to save $1.1 billion annually by 2027. Additionally, it has provided a cautious sales outlook for 2025 and is now aiming for operational breakeven by 2028. It still plans to submit filings for multiple vaccines and advance clinical trials for mRNA-1647 and mRNA-3705.
Despite the improvements and expansions, its revenue declined 29.94% in Q2 2024, accounting for $241 million. The primary reasons for the decline were lower sales volumes of the COVID-19 vaccine outside the US, increased competitive pressures for respiratory vaccines in the US, and the potential for revenue deferrals from 2024 into 2025.
The company expects sales growth of 40-50% in Q3 2024 and aims to end 2024 with $9 billion in cash. Despite current challenges, Moderna remains optimistic about its future growth, particularly in the EU market. It’s actively responding to the evolving vaccine market through new product launches and partnerships, positioning it for growth.
Baron Health Care Fund made the following comment about Moderna, Inc. (NASDAQ:MRNA) in its Q1 2023 investor letter:
“Moderna, Inc. (NASDAQ:MRNA) is a leader in the emerging field of mRNA-based vaccines and therapeutics and was one of the three main producers of the COVID vaccine. Shares fell during the quarter. We believe as COVID shifts away from pandemic status and becomes an increasingly commercial market (rather than government funded), there is increasing investor uncertainty around what a booster market could look like, which is pressuring shares. Looking beyond COVID, we think Moderna has the potential to disrupt the biopharmaceutical industry, from infectious disease vaccines to oncology, and we remain shareholders.”
2. Biogen Inc. (NASDAQ:BIIB)
Average Upside Potential: 43.33%
Number of Hedge Fund Holders: 46
Biogen Inc. (NASDAQ:BIIB) specializes in the discovery, development, and delivery of therapies for the treatment of neurological diseases to patients worldwide. It has a strong track record in the development of treatments for multiple sclerosis, Alzheimer’s disease, and spinal muscular atrophy, with research and development efforts aimed at addressing unmet medical needs and improving the lives of patients with neurological disorders.
The company’s focus on Alzheimer’s disease and other growth areas drive the recent full FDA approval of Leqembi, its second Alzheimer’s drug. Leqembi is expected to generate over $3.5 billion in peak revenue by the early 2030s. Biogen also has a promising pipeline, including BIIB080 (Alzheimer’s), BIIB122 (Parkinson’s), and Felzartamab (kidney disease), which has shown positive Phase 2 results.
It generated $592 million in free cash flow in Q2, driven by its high profit margins of 39%. Revenue in the second quarter of 2024 was up 0.36% year-over-year, recording a total amount of $2.46 billion. Core pharmaceutical revenue was up 5%, driven by the performance of four recent launches, which more than offset the 5% revenue decline in the MS business, with erosion in interferon business and generic competition in the EU.
TECFIDERA and VUMERITY showed growth, while TYSABRI declined due to shipment timing and competition. Rare disease franchise revenue grew 22%, driven by SKYCLARYS. LEQEMBI in-market sales reached $40 million in Q2.
It’s actively expanding its operations, having recently acquired Human Immunology Biosciences and gained drug approvals in various countries. The company has made significant strides in improving its business by launching new drugs, reducing costs, investing in R&D, growing externally, and optimizing its existing portfolio. Biogen Inc. (NASDAQ:BIIB) expects to secure approvals in 20 countries by the end of the year, demonstrating its commitment to growth, positioning it for long-term success.
Patient Capital Opportunity Equity Strategy stated the following regarding Biogen Inc. (NASDAQ:BIIB) in its Q2 2024 investor letter:
“Biogen Inc. (NASDAQ:BIIB) is another name that we believe is underappreciated. As a global biopharmaceutical business, the company is most well known for their products in multiple sclerosis, spinal muscular atrophy, and most recently Alzheimer’s disease. The new CEO, Christopher Viehbacher, is working to improve the company’s pipeline, most recently with their acquisition of Human Immunology Biosciences Inc. in May. Chris has a strong track record of successful M&A and we expect him to continue that tradition. More importantly, we think the market is currently giving the company no credit for success in their Alzheimer’s indication. While the uptake in Leqembi, their Alzheimer’s product, has been slow, we still see strong long-term potential for a patient population that is dramatically underserved. We find the risk/reward extremely attractive.”
1. Summit Therapeutics Inc. (NASDAQ:SMMT)
Average Upside Potential: 100.50%
Number of Hedge Fund Holders: 17
Summit Therapeutics Inc. (NASDAQ:SMMT) is a biopharmaceutical oncology company focused on developing novel therapies for rare genetic diseases. The pipeline includes potential treatments for cystic fibrosis and mitochondrial diseases. Its research and development efforts are aimed at addressing unmet medical needs and improving the lives of patients with rare genetic disorders.
The company has partnered with MD Anderson for 5 years to accelerate the development of ivonescimab, a lead drug candidate for lung cancer treatment. Ivonescimab is currently being evaluated in 20 clinical trials, including 7 for NSCLC. Early-stage trials have shown promising results. Summit Therapeutics Inc. (NASDAQ:SMMT) has seen a significant rise in its stock price, up 700% since the year started largely due to the promising results of this lead candidate.
It completed enrollment for a Phase 3 trial and expects positive results from previous trials to drive continued growth. It’s Partnering with Akeso, the company conducted successful Phase 3 clinical trials (HARMONi-A and HARMONi-2) for ivonescimab in NSCLC, demonstrating its potential.
The company has a strong financial position that allows it to invest in R&D and other growth initiatives. Despite increased IP R&D expenses due to a licensing agreement amendment, overall operating expenses remained stable in Q2 2024. With a promising pipeline, strategic partnerships, and positive clinical data, it appears to be a potential investment opportunity.
While we acknowledge the growth potential of Summit Therapeutics Inc. (NASDAQ:SMMT), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SMMT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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