The biotechnology scene is becoming difficult to ignore if you consider yourself a growth investor who seeks upside potential beyond just the numerous crowded artificial intelligence (AI) plays. Though there are still lower-cost AI stocks in the mega-cap universe, I’d argue that few are capable of the type of upside as some of the market’s most innovative biotechnology firms — like LLY, REGN, and BHVN.
Further, the biotechnology scene stands out as one of the industries that can also be made more efficient by the rise of AI technologies. Indeed, biotechnology investing can be rather speculative, given uncertainties involving clinical trials and how much “promise” is really in a firm’s development pipeline. Add a bit of the magic offered by AI tools, though, and I think the whole process of biotechnology innovation could be changed for the better.
In this piece, we’ll use TipRanks’ Comparison Tool to check out three fast-running biotechs that have what it takes to extend their gains many years into the future.
Eli Lilly (NASDAQ:LLY)
Eli Lilly’s parabolic surge has been many years in the making, with the name now up more than 116% in the past year alone on the back of weight-loss drug (GLP-1) hype. Though Ozempic and Wegovy may have received most of the praise, we can’t count out the growth prospects of Eli Lilly’s Mounjaro and Zepbound. Arguably, Eli Lilly’s offering may be perceived as better, given that it’s been more effective at lowering A1C (in other words, reducing average blood sugar levels) and producing larger drops in weight.
In any case, only time will tell which GLP-1 drug reigns supreme. For now, it’s hard not to be bullish on Eli Lilly as it looks to combat obesity with future innovations. And let’s not forget that GLP-1 drugs may have benefits beyond just weight loss. However, we’ll have to wait for how the clinical trials pan out.
Though I view Eli Lilly as the number-one GLP-1 stock, I’m a tad uncomfortable with the valuation. Shares trade at 131.6 times trailing price-to-earnings (P/E) after more than doubling in the past year. Like the AI boom, though, perhaps the obesity drug frenzy could exceed past even the wildest analyst expectations on Wall Street, which could make Eli Lilly’s premium worth paying. Personally, I think a small partial position in the name can’t hurt if you’re keen on investing in GLP-1 drugs.
What Is the Price Target of LLY Stock?
LLY stock is a Strong Buy, according to analysts, with 15 Buys and three Holds assigned in the past three months. The average LLY stock price target of $846.43 implies 9.1% upside potential.
Regeneron (NASDAQ:REGN)
Regeneron stock has been gaining in the past two years as well, now up 39% over the timespan. Of course, Regeneron isn’t even in the same league as Lilly when it comes to sheer momentum. That said, the company’s robust oncology pipeline (its linvoseltamab myeloma therapy was recently granted priority review from the FDA) and genetic medicine exposure make the biotech firm a top candidate to extend its run. Given the firm’s unique strengths in its corner of biotech, I can’t help but stay bullish.
Undoubtedly, oncology and genomics are two of the toughest areas of medicine to work in. In a recent sitdown with Mad Money host Jim Cramer, CEO Leonard Schleifer commented that gene therapy could be even bigger than AI for the biotech industry. He’s right. Gene therapy could be just as big as AI, especially as it applies to gene-editing tech (CRISPR) across various therapeutics.
At 27.8 times trailing P/E, shares are considerably cheaper than the biotech industry average of 48.4 times. If you seek genomics innovation at a reasonable price, REGN stock looks like a potentially solid bet.
What Is the Price Target of REGN Stock?
Regeneron stock is a Strong Buy, according to analysts, with 17 Buys, three Holds, and one Sell assigned in the past three months. The average REGN stock price target of $1,037.89 implies 9.1% upside potential.
BioHaven (NASDAQ:BHVN)
BioHaven is a mid-cap biotech stock that’s been among the hottest in the industry lately. Since its IPO in September 2022, the stock has gained 596%. That’s an absurd surge and one that may be far from over as the incredibly innovative firm looks to solve the issue of muscle loss while taking weight-loss drugs. Despite recent momentum, I’m staying bullish on BioHaven, just like many analysts covering the name.
Beyond obesity drugs, which are red-hot right now, the firm also has an enviable drug pipeline for a firm its size. With intriguing neuroscience programs in place, BioHaven is potentially starring in a massive market that it could dominate should its treatments continue to show promise through remaining clinical trials.
Recently, UBS (NYSE:UBS) initiated BHVN stock at a Buy, praising its “diverse set of innovative programs” and potential for its obesity drug. I couldn’t agree more. BioHaven may very well be one of the most exciting (and innovative) biotech lightweights on the market right now. The firm has the potential to make a massive splash if any one of its innovations turns into a blockbuster. That alone makes BHVN stock worth watching, if not buying, following the latest 13% pullback off highs.
What Is the Price Target of BHVN Stock?
BioHaven stock is a Strong Buy, according to analysts, with nine unanimous Buys assigned in the past three months. The average BHVN stock price target of $59.11 implies 13.1% upside potential.
The Bottom Line
Undoubtedly, biotech may hold growth trends that may just be able to rival AI. From obesity drugs to gene therapy, the following trio of highly innovative biotechs seem too intriguing to pass up. At this juncture, analysts see the most upside from BHVN stock (13.1%) for the year ahead.