We recently published a list of the 10 Oversold Pharma Stocks to Buy According to Analysts. In this article, we are going to take a look at where Immunovant, Inc. (NASDAQ:IMVT) stands against the other oversold pharma stocks to buy according to analysts.
On February 20, Emily Field, Head of European Pharma Research at Barclays, appeared on CNBC to discuss the dynamics of the pharmaceutical sector, the impact of US tariffs, and the performance of obesity drugs. She believed the industry may not underperform this year, at least in the first half. However, there are still several questions surrounding the performance of obesity drugs, as major players in the domain have exhibited contrasting previous year performance.
Talking about the tariffs, she said that their materialization poses a big open question for the pharmaceutical sector as some companies assemble their products in the US after manufacturing them abroad. Manufacturing costs are thus pretty low for these companies, which is a significant point to consider when determining the impact of tariffs. She believed that absorbing the additional cost of the tariffs would be very manageable for these companies. The market has reached the tail-end of the earnings season, and the situation hasn’t come up much on earnings calls over this quarter.
We recently talked about what Trump’s tariffs could mean for the healthcare industry in a recently published article on 12 Most Oversold Healthcare Stocks to Buy Now. Here is an excerpt from the article:
“Since more and more companies in the US are looking towards China for deals regarding the next promising molecule, whether in the obesity or cancer space, the impact of tariffs on this ongoing trend has become a subject of significant discussion in the healthcare industry. On February 7, Carlo Rizzuto, Versant Ventures managing director, appeared on CNBC’s ‘Fast Money’ to discuss the impact of tariffs on healthcare. Rizzuto believed that there are two ways in which tariffs could impact the industry. The first would be products innovated in China and brought over to the US or other markets. To understand how the tariffs would affect such trade processes, the industry would have to see how the tariffs are actually structured in the market.
Secondly and more tangibly, China is a massive center for contract research and manufacturing for the US healthcare industry. Therefore, anything that increases that cost is likely to make the market conditions more challenging. The healthcare industry is already under pressure in terms of investor sentiment, and an increase in cost is not going to help its functioning.”
Weight Loss Drugs and the Attention Around Them
Angelica Peebles, CNBC’s Health and Pharma reporter, sat with Eli Lilly’s Chief Scientific Officer to talk about the weight loss sector. From the conversation, she reported that the domain poses opportunity for drugs that are easier to use, such as pills, and medicines that make people lose more weight. Another debate people are having regarding the domain is how much weight loss users need to see on top of what they already have. Drugs delivering around 20% weight loss appear to benefit most of the audience, according to Eli Lilly’s Chief Scientific Officer Dan Skovronsky. He sees more potent drugs that deliver around 25% or more as having a smaller market.
He was further of the opinion that the most exciting thing he has seen in his career as a scientist and physician is how a multitude of diseases can potentially benefit from these weight loss drugs. Right now, their source for this information is the trends they have been seeing in patients’ responses.
Our Methodology
We used stock screeners to compile a list of pharma stocks that experienced significant declines over the past year. We then selected the 10 stocks with the highest analyst upside potential. We also added the number of hedge fund holders for these stocks, as of Q3 2024. The list is sorted in ascending order of analyst upside potential, as of February 21, 2025.
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 363.5% since May 2014, beating its benchmark by 208 percentage points (see more details here).
A closeup of a scientist working with a microscope in a biotech laboratory.
Immunovant, Inc. (NASDAQ:IMVT)
Year Perf: -42.86%
Analyst Upside: 138.04%
Number of Hedge Fund Holders: 36
Immunovant, Inc. (NASDAQ:IMVT) develops treatments for autoimmune diseases. Its product pipeline includes batoclimab and IMVT-1402, novel antibodies targeting the neonatal fragment crystallizable receptor (FcRn).
The company’s primary focus is boosting the potential of its lead asset, IMVT-1402, which is rapidly progressing with six Investigational New Drug (IND) applications cleared. Its development plans for Graves’ disease also paint an optimistic picture for the company, as it does not have competition in the domain. The company’s pivotal studies in Graves’ disease (GD) and difficult-to-treat rheumatoid arthritis (D2T RA) are to be conducted using standard YpsoMate® autoinjector technology and its planned commercial formulation.
As of December 31, 2024, the company’s pro forma cash balance was approximately $825 million, including around $450 million in gross proceeds from a private placement that closed on January 15, 2025. 36 hedge funds hold stakes in the company, and it ranks second on our list of oversold pharma stocks to buy according to analysts.
Baron Health Care Fund stated the following regarding Immunovant, Inc. (NASDAQ:IMVT) in its first quarter 2024 investor letter:
“Somewhat offsetting the above was adverse stock selection in biotechnology and health care supplies coupled with cash exposure amid favorable market conditions. Weakness in biotechnology was mainly due to disappointing performance from Rocket Pharmaceuticals, Inc. and Immunovant, Inc. (NASDAQ:IMVT), whose shares fell double digits in the period. Immunovant is focused on autoimmune disorders targeting the FcRn mechanism of action. A host of concerns weighed on Immunovant’s stock price, the most critical of which was competitor argenx SE’s failure in pemphigus vulgaris, which has raised questions about the addressable opportunity for the FcRn class. Overall, we continue to believe FcRn will command billions in revenue and that Immunovant has one of the two competitive offerings in the space. We are most optimistic about Immunovant’s development plans in Graves’ disease, a large commercial unmet need in which they currently have no competition.”
Overall, IMVT ranks 2nd on our list of the most oversold pharma stocks to buy according to analysts. While we acknowledge the potential of IMVT as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than IMVT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
