Jefferies Sees 6 Biotechs as Undervalued With Massive Upside

By Chris Lange Updated Jan 12, 10:48AM EST · Published Jun 22, 9:30AM EDT

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Jefferies Sees 6 Biotechs as Undervalued With Massive Upside — © Thinkstock

Biotech companies are known for having a high-risk high-reward relationship. The health care sector as a whole has been very positive for investors over the past year, leading some analysts to grow more bullish on biotech stocks within the sector.

24/7 Wall St. has taken a look at a few of these companies and what one key analyst has to say about them. Notably the firm believes that they have an incredible upside, some well over 100%.

Jefferies has picked out a few companies in the biotech industry that stand to win big over the coming year. Although these names come with some risk, when considering intellectual property, safety, efficacy and regulatory hurdles, balancing the risk variables with upside potential based on several routes to success, Jefferies would own these names now to take part in the longer-term opportunity.

Abeona Therapeutics Inc. (NASDAQ: ABEO) was given a Buy rating with a $22 price target, implying incredible upside of 340%. Jefferies believes Abeona’s lead ABO-102 is on an expedited path to regulatory approval in MPS IIIA, and its EB gene therapy program is another shot on goal — data from both programs has been encouraging and the firm believes this stock is substantially undervalued. Shares of Abeona closed Wednesday up 2% at $5.00, with a consensus analyst price target of $17.60 and a 52-week trading range of $2.31 to $9.44.

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Alnylam Pharmaceuticals Inc. (NASDAQ: ALNY) has a Buy rating and $102 price target, implying an upside of 20%. Given recent Phase 3 results from IONS, Jefferies believes Alnylam is optimally suited for approval in FAP with potential broader use; also, differentiated in hemophilia, acute hepatic porphyrias, and PCSK9 inhibition. Several programs are moving into Phase 3 in the second half of 2017. Shares of Alnylam recently closed up 3.9% at $84.52. The stock has a 52-week range of $31.38 to $84.69 and a consensus price target of $72.06.

Atara Biotherapeutics Inc. (NASDAQ: ATRA) has a Buy rating and a $30 price target, implying an upside of 109%. This company is on track to start its ATA129 Phase 3 in EBV-PTLD in the second half of this year, which will remove a major overhang, and Jefferies believes the trial also has a good chance to succeed. Several other earlier-stage programs already have valuable proof-of-concept clinical data the market is missing. Shares of Atara closed Wednesday up 6.3% at $14.35, with a consensus price target of $30.33 and a 52-week range of $11.80 to $25.73.

Intellia Therapeutics Inc. (NASDAQ: NTLA) has a Buy rating and a $36 price target, implying upside of 141%. Jefferies considers this company at the forefront of science and medicine using gene-editing to induce permanent changes. As Intellia continues to optimize translating their technology/platform to the clinic, the firm believes they will gain in value and appeal to larger biotech/pharma. Shares of Intellia recently closed up 9.5% at $14.94, with a consensus price target of $26.00 and a 52-week range of $10.83 to $27.20.

Ignyta Inc. (NASDAQ: RXDX) has a Buy rating and a $27 price target, implying upside of 170%. The lead program, entrectinib is a targeted therapy that has demonstrated solid activity vs select cancer-causing gene alterations, including NTRK/ROS1/ALK. The drug has differentiated CNS activity, which Jefferies believes can make it a preferred agent in a proportion of ROS1 NSCLC points. Shares of Ignyta closed Wednesday up 2.6% at $10.00, with a 52-week range of $4.15 to $10.50 and a consensus analyst target of $18.75.

Sangamo Therapeutics Inc. (NASDAQ: SGMO) has a Buy rating and a $17 price target, implying upside of 109%. The company had an impressive showing at ASGCT that positively influenced Jefferies’ view on the stock. One plus is that Sangamo’s differentiated tech versus CRISPR/Cas9 has been refined and provides a hedge. Technology also has been recently validated by Pfizer, and they are in the lead developmentally with programs in the clinic. Shares of Sangamo last closed down 0.6% at $8.15. The stock has a 52-week range of $2.65 to $8.60 and a consensus price target of $11.20.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.