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2 Biotech Shares Wells Fargo Says Ready to Bounce
The biotechnology sector started the year with a bang. The industry benchmark, iShares NASDAQ Biotechnology ETF (IBB), has risen ~ 11% so far in January – much better than the S&P 500’s 3% return. Five-star analyst Jim Birchenough, who covers the sector for Wells Fargo, is excited about what he sees. “Overall, we see around 20% to 30% additional increases for the sector by historical standards, and would argue that accelerated pace of innovation and greater pipeline de-risking should ultimately support higher returns on investment,” Birchenough said. An environment like this would be manna from heaven for any investor interested in pharmaceutical stocks; an improved political climate will only icing this cake. ‘While a split House and Senate supporting continued legal inertia would be best received, in terms of maintaining a positive status quo for the growth of biotechnology, we believe value propositions for emerging biotechnology therapies should win under any administration and a mixture of the House / Senate. , ”Birchenough added. With that in mind, we wanted to take a look at some of Wells Fargo’s recent choices in the biotechnology space to see if the investment firm can send us to any game changers. After running the tipsters through TipRanks’ database, we found out that two recent Buy ratings gained in the rest of the street, enough to achieve a ‘Strong Buy’ consensus rating. Karuna Therapeutics (KRTX) We will start with Karuna Therapeutics, a specialty pharmaceutical company focusing on mental health. Karuna is specifically working on the development of new drugs for the treatment of schizophrenia and dementia-related psychosis (DRP). With a potential patient base of more than 2.7 million people, it is a huge market. And the status of the current treatment options is generally considered less than satisfactory. Medication side effects are severe, while the therapeutic effects are less than expected. This leaves an opening for a business that can place a new, more effective treatment on the market. Karuna is currently undertaking the crucial Phase 3 EMERGENT-2 study from its leading drug candidate, KarXT, for the treatment of acute psychosis in adults with schizophrenia. KarXT has shown a differentiated safety profile and effectiveness in Phase 2 data. Furthermore, Phase 1b data in healthy older volunteers for DRP remain on track for 2Q21. This fixed pipeline, with a new remedy in several studies to treat various aspects of a serious illness, piqued Wells Fargo’s interest. Analyst Jacob Hughes, who treats KRTX for the firm, writes: ‘Karuna Therapeutics is our best idea in 2021. Although KRTX shares had an impressive run … we see a very attractive setup for the stock during the next few years and several important catalysts. in 2021 to raise the shares higher … We think the pipeline is unthreatened and we like the risk / reward at these levels as the value of KarXT is proven. For this purpose, Hughes rates the stock overweight (ie buy), and its price target of $ 163 implies an increase of ~ 59% for the coming year. (Click here to see Hughes’ record.) It’s not often that analysts all agree on a stock. So take note if this happens. KRTX’s strong buy consensus rating is based on a unanimous 6 buy. The average price target of $ 138.80 on the stock indicates that the current share price of $ 102.80 is up 35%. (See KRTX stock analysis at TipRanks) Zymeworks, Inc. (ZYME) Zymeworks, based in Vancouver, is a clinical stage of biotechnology involved in research into new drugs for the treatment of cancer, autoimmune diseases and inflammatory diseases. The company focuses on biotherapeutic drugs, drugs specifically designed for their target diseases. The company’s main candidate, zanidatamab, has indications for bile duct cancer, breast cancer and gastro-esophageal adenocarcinoma. The drug is being tested in phase 1/2 for these cancers. Zymeworks’ second clinical candidate, ZW49, is, like zanidatamab, a bispecific HER2 antibody in an early study as a solid tumor treatment. Initial data will be presented on January 27 during an investor event. Based on recent results from Zymeworks, Jim Birchenough of Wells Fargo writes: ‘[We] expects zanidatamab to differentiate from current HER2 standards based on the depth of response in both refractory and frontline patients, and to attract a prominent partner to pursue neoadjuvant and adjuvant breast cancer studies, and that the ZW49 dose ‘ a continuous dose is to show consistent responses to support further development, with upward potential of additional dose increase. Consistent with its positive stance, Birchenough ZYME estimates an overweight (ie buy) and its price target, at $ 71, implies a growth of ~ 47% ahead. (To view Birchenough’s record, click here.) If we now look at the rest of the street, it appears that other analysts are usually on the same page. With 4 buy and 1 Hold awarded in the last three months, the consensus rating is a strong buy. In addition, the average price target of $ 60.82 ~ ~ 26% implies upside from current levels. (See ZYME stock analysis on TipRanks) To find great ideas for biotechnology stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy ‘, a newly launched tool that combines all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the proposed analysts. The content is for informational purposes only. It is very important to do your own analysis before investing.