Piper Sandler Cos PIPR has identified three biotech stocks as its “top picks” for 2024. The investment bank is signaling a potential turnaround for the sector next year.
As illustrated in the data below, the biotech sector is lagging behind the broader U.S. equity market, as indicated by the performance of the SPDR S&P 500 ETF SPY.The iShares Biotechnology ETF IBB is a popular benchmark to gauge the performance of biotech equities in the U.S.
As reported by CNBC, Piper Sandler analysts Edward Tenthoff and Thad Barney remain optimistic about the biotech industry. They see attractive valuations and upcoming product launches ahead. Here are three of their top picks from the sector.
Arrowhead Pharmaceuticals: Unlocking the Potential of Gene Therapies
Arrowhead Pharmaceuticals Inc ARWR retains Piper Sandler’s favor, with an overweight rating reaffirmed by analysts. The company’s focus on phase 3 trials for plozasiran, targeting familial chylomicronemia syndrome and severe hypertriglyceridemia, has garnered attention.
Additionally, cardiovascular outcome trials for plozasiran or zodasiran could further solidify their impact. GlobalData projects sales of these therapies to reach $651 million and $399 million by 2030 and 2029, respectively. Despite a year-to-date share price decline of nearly 20%, Piper Sandler anticipates a 90% increase over the next 12 months.
Legend Biotech: Carvykti’s Rise to Prominence
Legend Biotech Corp LEGN emerges as another top pick, buoyed by its Carvykti drug for adult bone marrow cancer treatment. Piper Sandler describes it as “best in class,” with demand surpassing supply.
Predicting a substantial revenue surge from $506 million in 2023 to $1.05 billion in 2024, the investment bank foresees global supply reaching 10,000 doses annually by 2025, potentially pushing peak revenue beyond $5 billion.
Legend Biotech’s robust CAR-T Cell therapy pipeline and recent collaboration with Novartis contribute to Piper Sandler’s bullish outlook, expecting a 53.3% increase in shares over the next year.
Alnylam Pharmaceuticals: A Focus on Neurological Disorders
Alnylam Pharmaceuticals Inc ALNY completes Piper Sandler’s top picks, with emphasis on its phase 3 trials for Amvuttra, a drug targeting polyneuropathy. Forecasts predict a sales jump from $550 million in 2023 to $1.13 billion in 2025. Alnylam’s commitment to addressing severe hypertension and Alzheimer’s disease through ongoing trials further adds to its appeal.
Despite a year-to-date share price dip of nearly 16%, Piper Sandler sees a 10.3% potential upside over the next 12 months, projecting a share price of $217.
With the biotech sector showing signs of recovery and potential benefits from expected U.S. Federal Reserve interest rate cuts in the upcoming year, these selections offer attractive prospects for investors looking for growth possibilities in 2024.