3 biotech stocks with blockbuster potential
When it comes to outsized reward opportunities, few sectors can beat biotech stocks with blockbuster potential. Basically, the underlying sector enjoys a massive footprint. According to Grand View Research, the size of the global biotechnology market reached a valuation of $1.37 trillion last year. However, the segment could grow at a compound annual growth rate (CAGR) of 13.96% from 2023 to 2030, according to analysts. By the end of the forecast period, the segment could post revenue of $3.88 trillion. Therefore, the top biotech stocks to buy will always attract speculative interest.
However, investing in biotech stocks presents significant risks. First, anything can happen during clinical trials of new treatments. And investors waste no time punishing stocks, especially those tied to financially unstable companies. Nevertheless, high-potential biotech stocks are gaining attention because of their potential ability to achieve scientific breakthroughs. If you can handle the heat, here are three tantalizing ideas to consider.
Novo Nordisk (NVO)
A Danish multinational pharmaceutical company, Novo Nordisk (NYSE:NVO) is one of the best players on the pitch. It is also one of the leading biotech stocks with blockbuster potential, especially due to its long track record. Specifically, Novo might be attractive because of its drug Wegovy. By Fierce Pharma, Wegovy helps some obese patients reduce their weight. Last year, the drug got its first approval from the US Food and Drug Administration.
Quite transparently, the post highlights significant challenges for Wegovy, including manufacturing setbacks delaying supplies. Additionally, the social media and celebrity craze for Wegovy and another treatment Novo Ozempic (which can help with weight loss) has imposed more inventory issues.
Nevertheless, having a massive demand is a much better problem than the opposite situation. Financially, Novo benefits from a stable balance sheet, solid long-term revenue growth and consistent profitability. It should be noted that its net margin for the previous year stands at 32.47%, better ranked than 93.44% of biotech competitors. It is therefore an excellent idea for those who wish to invest in biotech stocks.
BioMarin Pharmaceutical (BMRN)
A lesser known entity but which nevertheless ranks among the biotech stocks with high potential to buy, BioMarin Pharmaceutical (NASDAQ:BMRN) focuses on research in enzyme replacement therapies. Currently, BioMarin has a market capitalization of $17.27 billion. Year-to-date, BMRN has lost about 9% of its equity value. However, over the past 365 days, shares have gained nearly 17%.
For those new to BioMarin, the regulatory narrative focuses heavily on its Roctavian hemophilia A gene therapy. Previously, BMRN was attracting a lot of interest as one of the high-potential biotech stocks because if approved by the FDA, it would be the first gene therapy for the disease mentioned earlier. After many struggles, BioMarin obtained conditional marketing authorization from the European Commission.
Still, FDA approval is the big dog. According Fierce Pharma, the publication noted in early March this year that the regulatory agency had pushed back its decision date by three months. Ultimately, analysts remain bullish on BMRN, assigning it a Moderate Buy. Their average price target sits at $118.16, implying more than 28% upside potential.
Travere Therapeutics (TVTX)
Based in California, Travere Therapeutic (NASDAQ:TVTX) says its guideline focuses on identifying, developing and delivering life-changing therapies for people with rare diseases. While this is an exciting example of a biotech stock with blockbuster potential, potential investors should be clear: it’s also one of the riskiest. Since opening in January, TVTX has fallen nearly 18% in net worth.
Over the past year, TVTX has lost over 24%. Yet those looking to invest in biotech stocks have put Travere on their radar because of Sparsentan, a new oral small-molecule therapy that shows promise for primary immunoglobulin A (IgA) nephropathy and focal segmental glomerulosclerosis (two types of kidney disease).
However, those considering participating in TVTX should understand that they are dealing with an ambitious undertaking. For example, Gurufocus points out that it suffers from a rather weak balance sheet. Additionally, its three-year revenue growth rate (as well as its prior-year net margin) is in negative territory. Nonetheless, analysts view TVTX as a strong consensus buy. Their average price target stands at $28.17, implying nearly 66% upside potential.
As of the date of publication, Josh Enomoto had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.