5 Most Promising Biotech Stocks According to Analysts

In this article, we discuss 5 most promising biotech stocks according to analysts. If you want to see more stocks in this selection, check out 10 Most Promising Biotech Stocks According to Analysts. 

5. Ginkgo Bioworks Holdings, Inc. (NYSE:DNA)

Number of Hedge Fund Holders: 25

Average Upside Potential as of February 24: 100.67%

Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) was founded in 2008 and is headquartered in Boston, Massachusetts. The company develops a platform for cell programming, which is used to program cells to enable biological production of products, such as novel therapeutics, food ingredients, and chemicals derived from petroleum. Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) is one of the most promising biotech stocks. 

On November 28, Gaurav Goparaju, an analyst at Berenberg, began coverage of Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) and assigned it a Buy rating with a $6 price target. Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) is utilizing its platform to commercialize synthetic biology on a large scale in various industries and is the only company with a widely-scaled horizontal platform in this field, according to the analyst. The analyst thinks that Ginkgo is in a favorable position to revolutionize cell programming in multiple industries.

According to Insider Monkey’s Q4 data, 25 hedge funds were long Ginkgo Bioworks Holdings, Inc. (NYSE:DNA), compared to 24 funds in the prior quarter. 

4. Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE)

Number of Hedge Fund Holders: 26

Average Upside Potential as of February 24: 108.11% 

Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) is a California-based biopharmaceutical company, focused on the identification, development, and commercialization of treatments for rare and ultra-rare genetic diseases in North America, Latin America, Japan, Europe, and internationally. The company expects total revenue guidance for 2023 to be between $425 million to $450 million, versus a $426.25 million consensus. It is one of the most promising biotech stocks to invest in according to analysts. 

On February 17, Baird increased Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE)’s price target from $50 to $57 and maintained an Outperform rating on the stock. The firm’s rating is mainly influenced by the company’s valuation. However, Baird also observed that Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) could experience more catalysts in mid-to-late 2023, which may further benefit the stock compared to previous years.

According to Insider Monkey’s fourth quarter database, 26 hedge funds were bullish on Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE), compared to 31 funds in the prior quarter. Avidity Partners Management is the biggest stakeholder of the company, with nearly 3 million shares worth $138.5 million. 

3. Intellia Therapeutics, Inc. (NASDAQ:NTLA)

Number of Hedge Fund Holders: 39

Average Upside Potential as of February 24: 142.17%

Intellia Therapeutics, Inc. (NASDAQ:NTLA) was incorporated in 2014 and is headquartered in Cambridge, Massachusetts. It is a genome editing company that focuses on the development of therapeutics. The company’s revenue of $13.6 million climbed 5.8% year-over-year, beating market estimates by $2.89 million. Intellia Therapeutics, Inc. (NASDAQ:NTLA) ended 2022 with a strong financial position, reporting approximately $1.3 billion in cash as of December 31, compared to $1.1 billion as of December 31, 2021.

On February 24, Geulah Livshits, an analyst at Chardan, maintained a Buy rating on Intellia Therapeutics, Inc. (NASDAQ:NTLA) but lowered the price target from $129 to $111. The reason for the reduced valuation is due to the emergence of new public and private players in the gene-editing technology sector, which is likely to increase competition in the in vivo approach to rare diseases. As a result, the analyst has trimmed Intellia Therapeutics, Inc. (NASDAQ:NTLA)’s in vivo platform’s value.

According to Insider Monkey’s Q4 data, 39 hedge funds were long Intellia Therapeutics, Inc. (NASDAQ:NTLA), compared to 36 funds in the last quarter. Cathie Wood’s ARK Investment Management is the biggest position holder in the company, with 9.4 million shares worth $328.6 million. 

Carillon Tower Advisers discussed its stance on Intellia Therapeutics, Inc. (NASDAQ:NTLA) in its Q2 2021 investor letter.

“Intellia Therapeutics is a clinical-stage genome editing company focused on the development of proprietary, potentially curative therapeutics. The company’s stock soared after announcing positive interim data from an ongoing phase 1 clinical study of its in vivo gene editing candidate, which is being developed as a single-dose treatment for hereditary transthyretin (ATTR) amyloidosis. This specific form of therapy would be the first of its kind resulting in the precision editing of a gene in a target tissue in the human body.”

2. Vir Biotechnology, Inc. (NASDAQ:VIR)

Number of Hedge Fund Holders: 17

Average Upside Potential as of February 24: 143.07%

Vir Biotechnology, Inc. (NASDAQ:VIR) is a California-based commercial-stage immunology company that develops therapeutic products to treat and prevent serious infectious diseases. It is one of the most promising biotech stocks to invest in, with an average upside potential of 143% as of February 24. 

Goldman Sachs analyst Paul Choi on February 21 upgraded Vir Biotechnology, Inc. (NASDAQ:VIR) from Neutral to Buy and increased the price target from $41 to $53. The upgrade is based on the expected mid-2023 release of VIR-2482 data, which is anticipated to demonstrate significantly better efficacy than currently approved and competing pipeline-stage flu vaccines. This outcome is predicted to drive upward revisions to consensus estimates and potentially result in substantial growth for the company’s shares. The analyst sees a “compelling risk/reward” on Vir Biotechnology, Inc. (NASDAQ:VIR)’s shares and considers the upcoming readout as an “underappreciated catalyst that could drive a major new leg of growth.”

According to Insider Monkey’s Q4 data, 17 hedge funds were bullish on Vir Biotechnology, Inc. (NASDAQ:VIR), compared to 18 funds in the last quarter. Cliff Asness’ AQR Capital Management is a significant position holder in the company, with 308,673 shares worth $7.8 million. 

1. Zai Lab Limited (NASDAQ:ZLAB)

Number of Hedge Fund Holders: 22

Average Upside Potential as of February 24: 162.73%  

Zai Lab Limited (NASDAQ:ZLAB) was incorporated in 2013 and is headquartered in Shanghai, China. The company develops and commercializes therapies to treat oncology, autoimmune disorders, infectious diseases, and neuroscience primarily in Mainland China and Hong Kong. It is one of the most promising biotechnology stocks to invest in. 

On January 30, Zai Lab Limited (NASDAQ:ZLAB)’s application for a new drug, sulbactam-durlobactam (SUL-DUR), was granted priority review by China’s National Medical Products Administration. The drug is designed to treat infections caused by Acinetobacter baumannii, including multidrug-resistant and carbapenem-resistant (CRAB) strains. Additionally, Innoviva, Inc. (NASDAQ:INVA) has filed an application for the same drug in the United States, which is also under priority review. This designation provides a shortened review period in both countries.

According to Insider Monkey’s fourth quarter database, Zai Lab Limited (NASDAQ:ZLAB) was part of 22 hedge fund portfolios, compared to 24 in the last quarter. Simon Sadler’s Segantii Capital is the largest stakeholder of the company, with 2.4 million shares worth $74.5 million. 

Here is what ClearBridge Investments International Growth ACWI ex-U.S. Strategy has to say about Zai Lab Limited (NASDAQ:ZLAB) in its Q4 2021 investor letter:

“Economies in Asia, meanwhile, are taking the opposite approach on stimulus, with China lowering its reserve requirement ratio for banks to support flagging growth in the world’s second-largest economy. Japan’s new government passed a large stimulus bill after its economy contracted in the third quarter. Despite these actions, sentiment remains decidedly negative in these regions. Our underweight to Japan proved beneficial during the quarter while our single holding in China – biotechnology company Zai Lab – sold off sharply mostly due to generally weak sentiment around Chinese health care stocks.”

Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily enewsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also check out 15 Most Promising QQQ Stocks and 10 Best March Dividend Stocks to Buy.