We recently compiled a list of the 10 Best Biotech Penny Stocks to Buy Now. In this article, we are going to take a look at where Editas Medicine, Inc. (NASDAQ:EDIT) stands against the other biotech penny stocks.
Biotech Stocks in 2024: Growth Prospects, Key Players, and Investment Opportunities
In 2024, the healthcare industry has been doing well, encouraging investors to look into new and exciting opportunities. Particularly biotech is anticipated to profit, despite the dangers of continuous mergers and acquisitions. Traders ought to exercise caution. With an 11.8% CAGR, the worldwide biotechnology market is expected to reach USD 4.25 trillion by 2033. It is expanding quickly. The U.S. market is projected to increase at an 11.90% CAGR to reach USD 763.82 billion by 2033 from its 2023 valuation of USD 246.18 billion. In 2023, the U.S. led North America in terms of revenue share.
Fitch Ratings maintains a Neutral outlook for the global biotech industry in 2024. Its primary motivation to do so is the moderating inflationary rates. The industry is supported by factors such as a growing aging population, increased healthcare access, and a rise in chronic and specialist conditions. Fitch also forecasts a heightened focus on drug pricing and patient value.
Biotech equities including Vincerx Pharma (VINC), Corbus Pharmaceuticals (CRBP), and Viking Therapeutics (VKTX) have seen significant gains in 2024, with returns ranging from 134% to 446%, despite receiving less media attention than industries like technology and cryptocurrencies. Positive weight loss drug trial findings, for example, let Viking Therapeutics connect its product with a potentially billion-dollar market need. Although the success of individual stocks indicates prospective gains, larger indexes such as the NASDAQ Biotechnology PR USD Index reveal the volatility of the industry; it fell 11% between 2022 and 2023 as a result of economic difficulties but gained 3% by February 2024.
Investors eyeing biotech stocks may wonder which areas are prone to buyouts. Laura Chico identified key areas to watch for potential buyouts:
“Obesity has been a really big theme in 2023, and will probably continue for the foreseeable future, but across the area, at least in these recent M&A transactions, it’s been really broad-based, and I think that’s really a testament to the innovation in the space. We have several deals in oncology, immunology, inflammation, neuro, and even rare diseases. So it’s not just within certain verticals at this point.”
Chico advises biotech investors to monitor FDA approval news, scientific and clinical risks, and the disease categories that companies are targeting since these might provide indicators of company success. On March 6, Healthcare Equity Strategist Jared Holz talked about this possibility on CNBC’s “The Exchange”:
“[Biotech] has been one of the worst spaces in all of the equity market since mid-2021. We’ve barely seen any positive activity for any pronounced period until very recently… When you consider the risk factors, concerning drug prices and other elements of the business… all these risk factors are much more well understood and we can continue to move higher from here.”
Holz emphasizes the potential in well-positioned small-cap choices and says it’s not too late to invest in large-cap biotech equities. We’ve put up a list of oversold biotech stocks, which includes excellent choices under $20 as well as cheap options that have been missed.
Our Methodology
To rank the best biotech penny stocks to buy now, we first identified large biotech companies priced under $5. We then selected the top 10 and ranked them based on the number of hedge fund holders in Q1 2024.
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).
A scientist looking into a microscope in a clinical lab setting, symbolizing the cutting edge research done by the biotech company.
Editas Medicine, Inc. (NASDAQ:EDIT)
Number of Hedge Fund Holders: 21
Editas Medicine, Inc. (NASDAQ:EDIT) is a clinical-stage biotechnology company focused on developing gene editing therapies using CRISPR technology. The company aims to treat genetic diseases by directly altering patients’ genomes. Editas Medicine’s lead candidate, EDIT-301, is advancing through late-stage clinical trials for sickle cell disease and beta-thalassemia. The company has focused its strategy on enhancing gene expression in rare genetic diseases, aiming to establish a pioneering position in these indications. Editas has also secured significant legal victories affirming its intellectual property rights in CRISPR technology.
Based on the analysis of ten Wall Street analysts over the last three months, Editas Medicine is rated as a Moderate Buy. With a range of $7.00 to $18.00, the average 12-month price target is $11.50. From its current market price of $4.74, this suggests a potential rise of 142.62%. In Q1 2024, there were 21 hedge fund holders in the company. The hedge fund with the largest shares in the stock is Deep Track Capital with 5,527,290 worth $41,012,492, comprising 1.17% of the company’s total portfolio.
In Q1 2024, Editas Medicine, Inc. (NASDAQ:EDIT) reported a net loss of $62.0 million, compared to $49.0 million in Q1 2023, with a net loss per share of $0.76 versus $0.71 in the same period last year. Collaboration and other R&D revenues decreased sharply to $1.1 million in Q1 2024 from $9.9 million year-over-year. R&D expenses increased to $48.8 million from $37.8 million, reflecting continued investment in clinical programs. The company’s general and administrative expenses decreased to $19.3 million from $23.0 million. As of March 31, 2024, Editas held $376.8 million in cash, cash equivalents, and marketable securities, down from $427.1 million at the end of 2023.
Overall EDIT ranks 5th on our list of the best biotech penny stocks to buy. You can visit 10 Best Biotech Penny Stocks to Buy Now to see the other biotech penny stocks that are on hedge funds’ radar. While we acknowledge the potential of EDIT 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 timeframe. If you are looking for an AI stock that is more promising than EDIT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.