Health and Healthcare
7 Large Biotechs Expected to Outperform This Earnings Season
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Earnings season is upon us and investors are pining for information about which stocks and sectors will do well. After all, many investors missed the bulk of the recovery from March’s panic selling lows. That means they are looking for new ideas, keeping in mind that there is an election in just three weeks and that the stock market is still close to its all-time highs.
Credit Suisse has previewed earnings for the top biotech stocks. The firm has Outperform ratings and sees big upside in some of the top companies. How that performance comes to pass remains to be seen, but this is what the firm is expecting based on its own research, and the outlook for forward sales and drug pipeline development.
As a reminder, 24/7 Wall St. always points out that investors should never use a single analyst report as the sole basis to buy or sell a stock. Individual reports should only be a starting point of gathering more data to determine whether the risk-reward metrics line up.
Of the large cap biotech stocks, Credit Suisse sees these as the top stocks for relative upside to the peer group.
Amgen Inc. (NASDAQ: AMGN) is expected to maintain or refine its guidance given its likely continued recovery from the pandemic headwinds, but overall commercial run rates are still below normal. As a result, Credit Suisse reiterated an Outperform rating with a $286 price target, implying upside of 21% from Friday’s closing price of $235.72. Amgen stock has a 52-week range of $177.05 to $264.97. The consensus analyst price target is $260.79.
Vertex Pharmaceuticals Inc. (NASDAQ: VRTX) was reiterated as Outperform with a $292 price target. Credit Suisse views this company as the most insulated from COVID-19. While the brokerage firm didn’t assign any value to Alpha-1 Antitrpsin (AAT), it believes the VX-814 failure puts further pressure on expansion beyond cystic fibrosis. Vertex Pharma stock last closed at $218.08, with a 52-week range of $174.82 to $306.08. Analysts have a consensus target of $306.09.
Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) was reiterated with an Outperform rating and a $745 price target, implying an upside of 24%. Credit Suisse continues to remain positive on Regeneron ahead of the third quarter earnings, noting strong Dupixent script numbers and a likely Eylea recovery. Also now that the company has submitted an EUA request for the REGN-CoV2 Ab cocktail, Credit Suisse has factored in potential sales with (in additional to the BARDA contract). Regeneron Pharma stock last closed at $599.74, with a 52-week range of $294.86 to $664.64. Analysts have a consensus target of $678.33.
Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) recently announced that it expects to raise its full-year 2020 revenue guidance by more than $200 million, signaling a likely positive third quarter print. Credit Suisse believes a third quarter beat and raise is somewhat expected, as current revenue guidance appears likely conservative following a strong second quarter. Credit Suisse reiterated an Outperform rating with a $147 price target, implying an upside of 18% from Friday’s closing price of $124.13. Alexion stock has a 52-week range of $72.67 to $128.57. The consensus analyst price target is $143.28.
BioMarin Pharmaceutical Inc. (NASDAQ: BMRN) is expected to have in-line earnings at Credit Suisse based on its observation that patient flows have generally picked up from the lows observed in March and April. This combined with the fact that most of BioMarin’s drugs treat rare fatal diseases and are “relatively mature”. The brokerage firm noted that the Roctavian updates will likely be the main focal point for investors, and the company is expected to have a meeting with the FDA soon to discuss approval. Credit Suisse reiterated an Outperform rating with a $102 price target, implying upside of nearly 29% from the most recent closing price of $79.25. BioMarin stock has a 52-week range of $67.10 to $131.95. Analysts have a consensus target of $110.48.
Insmed Inc. (NASDAQ: INSM) was reiterated with an Outperform rating and a $50 price target, implying an upside of almost 38% from the most recent closing price. While Insmed has yet to reinstate 2020 guidance estimates for Arikayce, Credit Suisse expects the positive Arikayce trends observed in the second quarter will continue to the third quarter. However, near-term Arikayce use could come under pressure if COVID/seasonal flu worsens, which provides the basis for Credit Suisse’s in-line estimates. Alexion stock recently closed at $36.30, with a 52-week range of $12.09 to $37.41. The consensus analyst price target is $46.00.
United Therapeutics Corp. (NASDAQ: UTHR) was reiterated with an Outperform rating and a $145 price target, implying an upside of 26%. Credit Suisse noted that the stock offers considerable value and looks ahead of Treprostinil Inhalation Powder (TreT) updates. United Therapeutics stock was last seen at $115.00, with a 52-week range of $75.58 to $127.79. The consensus analyst price target is $144.40.
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