Health and Healthcare
UBS Very Bullish on Biotech Stocks Ahead of Second-Quarter Earnings
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After the biotech stocks were absolutely crushed in the late winter and early spring, many of the top firms we cover on Wall Street were aggressive in their calls to buy the stocks that had been knocked down, in some cases, as much as 25%. One of those firms was UBS.
In a new research report, UBS analysts are very positive on some top biotech stocks in front of the upcoming second-quarter earnings season. UBS also highlighted upcoming trial data, and on some of the top stocks they cover they raised the price targets.
While big cap biotech stocks can lend the most shelter to investors, none of these names are appropriate for conservative accounts, with the possible exception of Amgen. With the market teetering some, investors may want to look at when the specific stocks they are interested in report, and scale in a small purchase prior. If it goes higher you are long the stock, if it goes down you can add more shares.
Here are some of the top biotech names to buy from UBS before second-quarter earnings numbers hit the tape.
Alexion Pharmaceuticals Inc. (NASDAQ: ALXN) is a stock to buy at UBS and a potential acquisition target. While not a pure large cap stock, the UBS analysts see likely accretive near-term to an acquirer given $1.5 billion revenues that are big enough to be significant to a bigger company.
The analysts are positive on the shares on upside to the numbers for the quarter, Soliris label expansion and the ongoing transition from a one-drug company to a two- to three-drug firm. The UBS price target for the stock is $202. The Thomson/First Call consensus target is $193.89. Alexion closed Tuesday at $159.08 a share.
ALSO READ: Upcoming Catalysts Could Drive Seven Biotech and Health Care Stocks Higher
Amgen Inc. (NASDAQ AMGN) is one of the mega cap biotechs that UBS thinks could beat earnings estimates. Over the past five years, the company has had free cash flow of at least $3 billion a year. Over the past decade, the company has grown after-tax profit by 14% compounded annually.
The primary focus at Amgen is results from the interim analysis of Phase 3 ASPIRE data for Kyprolis and regulatory update of the PCSK9 program, both of which could be huge for the stock. Investors are paid a 2% dividend. The UBS price target for the stock is $129, and the consensus number is $132.82 Amgen closed Tuesday at $119.96.
BioMarin Pharmaceutical Inc. (NASDAQ: BMRN) is a top midcap to buy at UBS, as well as a possible takeover target. The UBS team thinks that media speculation of big-pharma interest in BioMarin is likely related to the commercial success of the orphan drug model globally. Its diversified and expanding pipeline could also provide significant strategic value to acquirers.
While some important Phase 3 data was moved to next year, a successful Vimizim launch is key to the near-term success and momentum for the stock. The UBS price target for the stock is posted at $74, and the consensus figure is $82.38. BioMarin closed Tuesday at $59.92.
Celgene Corp. (NASDAQ: CELG) is another mega cap name to buy at UBS. The big biotech has presented results from an analysis that showed encouraging news for blockbuster drug Revlimid as a treatment for multiple myeloma. A combination of Revlimid and low-dose dexamethasone significantly improved overall survival and progression-free survival rates, leading some experts to conclude that the treatment may become the new standard of care for the disease.
The UBS team is focused on details in the financials, and the Otezla launch data and the potential for additional Phase 3 data from the drug. Otezla is an oral treatment for adult patients with active psoriatic arthritis. UBS has a $105 price target, and the consensus target is $95.15. Celgene closed on Tuesday at $85.72.
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Gilead Sciences Inc. (NASDAQ: GILD) is another favorite name to buy in front of the second-quarter earnings. With the successful hepatitis C drug Sovaldi launched, the UBS team says they will be watching closely for the sales figures and other metrics related to the drug. They are also looking for the company to retire convertible debt. UBS has a $115 price target, which was raised from $110. The consensus target is $100.87. Shares closed Tuesday at $87.11.
Incyte Corp. (NASDAQ: INCY) is rated Buy and is another stock that could be in the sights of a larger company. In addition to its current validated approach in hematology-oncology, there is reason to believe the three wholly owned clinical-stage assets could drive several billions in revenue. That is something important for an acquiring company.
The analysts will be very focused on further updates to the Jakafi solid tumor program. The UBS price target is $90, and the consensus number is much lower at $71.23. Incyte shares closed Tuesday at $651.72.
Vertex Pharmaceuticals Inc. (NASDAQ: VRTX) is another big cap biotech leader to buy. The company got on the biotechnology map with a blockbuster hepatitis C drug. Although the company’s Kalydeco cystic fibrosis drug failed to meet its primary endpoint in a Phase 3 trial on patients with one form of the disease, UBS remains long-term positive. UBS has a $115 target, and the consensus target is $106.93. The stock closed Tuesday at $95.04.
ALSO READ: Thirteen Analyst Stocks Under $10 With Huge Upside Potential
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