Standing among the most compelling opportunities, biotech stocks to buy and hold also present high risks. Unlike other sectors, companies can’t just introduce health-related products directly to the market. Instead, they must undergo intensive clinical tests to ensure broader public safety. During these processes, plenty of things can go wrong, thus introducing volatility to the space.
Still, investors who want to maximize the return potential of their speculation-earmarked funds should consider the best biotech stocks for 2023. Specifically, this list will target decently stable enterprises with massive upside targets, as determined by Wall Street analysts.
And by massive, I really mean that. The majority of these biotech stocks with breakthrough products feature price targets that imply triple-digit percentage gains. And one, in particular, enjoys a 733% upside forecast.
Of course, the other side to this equation is that you must be willing to accept serious risks. If that’s you, these are the biotech stocks with high growth potential.
Biotech Stocks to Buy and Hold: Verrica Pharmaceuticals (VRCA)
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Headquartered in West Chester, Pennsylvania, Verrica Pharmaceuticals (NASDAQ:VRCA) is a dermatology therapeutics company developing medications for skin diseases requiring medical interventions. Per its website, Verrica is focused on innovation, changing the narrative around viral skin diseases, and making treatment a more efficient process for both physicians and patients. Notably, VRCA resonates with investors, with shares already up over 115% since the beginning of this year.
Interestingly, though, VRCA is down a bit more than 9% in the past 365 days, making it relatively undervalued. Financially, Verrica suffers from common challenges associated with higher-risk biotech stocks to buy and hold; namely, profitability woes. Both its operating and net margins sit well in negative territory.
On the other hand, Verrica features a robust balance sheet. Notably, its cash-to-debt ratio pings at 22.46, ranked better than 62.52% of other biotech stocks with breakthrough products. Finally, analysts peg VRCA as a consensus strong buy. Their average price target stands at $10.67, implying 72% upside potential.
Biotech Stocks to Buy and Hold: Point Biopharma (PNT)
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Hailing from Pittsburgh, Pennsylvania, POINT Biopharma (NASDAQ:PNT) focuses on the next chapter of radiopharmaceutical therapy. Leveraging leading-edge technologies, Point Biopharma aims to offer new hope to patients with cancer. So far, PNT represents a slowly burning fire, gaining 6% since the Jan. opener. However, in the trailing one-year period, shares slipped nearly 15%.
Nevertheless, POINT Biopharma may represent one of the biotech stocks to buy and hold for the long haul. Financially, the company ranks a step above its competitors. For example, it commands excellent strengths in the balance sheet, primarily because it carries zero debt. This fact alone affords the enterprise considerable flexibility during these uncertain times.
Also, POINT features a trailing-year net margin of 43.38%. This stat ranks better than nearly 96% of the competition. Also, with a trailing multiple of only 7.5, it makes a case for undervalued biotech stocks to consider. Lastly, analysts peg PNT as a unanimous strong buy. Their average price target lands at $14.33, implying over 87% upside potential.
Biotech Stocks to Buy and Hold: OmniAb (OABI)
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Based in Emeryville, California, OmniAb (NASDAQ:OABI) claims to push the forefront of therapeutic antibody discovery. Per its website, OmniAb provides its pharmaceutical industry partners access to the most diverse antibody repertoires and cutting-edge screening technologies. These advantages help enable the discovery of next-generation therapeutics. However, the market has been a bit slow to respond, with shares gaining slightly so far in 2023.
Still, OABI makes a case for biotech stocks to buy and hold for speculators. Overall, the company features a series of enticing financial metrics. For instance, on the balance sheet, OmniAb’s equity-to-asset ratio pings at 0.81, above 65.66% of its peers.
Operationally, the enterprise features a three-year revenue growth rate of 62.9%, well above the sector median of 4.05%. Further, OABI trades at 6.06 times trailing sales. As a discount to revenue, OmniAb ranks better than 61.79% of sector players, making it one of the undervalued biotech stocks. To close out, analysts peg OABI as a unanimous strong buy. Their average price target comes out to $9.40, implying 170% upside potential.
CorMedix (CRMD)
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Operating out of New Jersey, CorMedix (NASDAQ:CRMD) is a biopharma focused on developing and commercializing therapeutic products for the prevention and treatment of life-threatening conditions and diseases. Mainly, it aims to provide therapeutic options to reduce and treat infectious and inflammatory diseases. CRMD enjoys decent investor support, gaining 12% since the Jan. opener. Also, in the trailing year, it’s up nearly 22%.
For investors, the benefit for CorMedix centers on its potential as one of the biotech stocks with breakthrough products. It has to be this way because financially, it appears significantly overvalued. For example, CRMD trades at 2,340 times trailing sales. Also, it trades at 3.63 times book value, ranking worse than 67.44% of other biotech stocks to buy and hold.
However, one factor to consider is its solid balance sheet. Right now, CorMedix carries a cash-to-debt ratio of 73.22, outflanking 74.52% of its rivals. Turning to Wall Street, analysts peg CRMD as a consensus moderate buy. Their average price target hits $14.50, implying nearly 210% upside potential.
Adicet Bio (ACET)
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Headquartered in Boston, Massachusetts, Adicet Bio (NASDAQ:ACET) focuses on developing universal off-the-shelf T-cell therapies for cancer. Per its website, gamma delta T-cells represent a new generation of universal immune cell therapy, thereby offering tremendous potential. Currently, Adicet carries a market capitalization of $253.4 million. Since the start of the year, ACET fell 29%, admittedly not offering much confidence.
At the same time, for intrepid contrarians, ACET could rank among the biotech stocks with high growth potential. While it’s probably not sustainable, at the moment, Adicet’s three-year revenue growth rate pings at 128.4%. However, it’s not purely speculative as the company also enjoys decent stability in the balance sheet.
Also, ACET could make a case for undervalued biotech stocks. Right now, ACET trades at 0.96-times tangible book value ranked favorably below 80.18% of the competition. Looking to the Street, analysts peg ACET as a unanimous strong buy. Their average price target lands at $26.40, implying over 334% upside potential.
Altimmune (ALT)
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Based in Maryland, Altimmune (NASDAQ:ALT) focuses on developing next-gen peptide therapeutics for obesity and liver disease. As a clinical-stage biopharma, it’s not the biggest enterprise in the world. Indeed, its market cap only comes out to $257.7 million. Further, ALT sank almost 67% since the January opener, a stunning loss. Oddly, though, in the trailing year, it’s up nearly 18%.
Frankly, those who consider ALT as a candidate for biotech stocks to buy and hold must have ample patience. On paper, its three-year EBITDA growth rate sits 5.6% below parity. Its free cash flow growth rate during the same period sank to 22.1% below zero.
On the other hand, Altimmune does enjoy outstanding strengths in the balance sheet. In particular, its cash-to-debt ratio stands at 164.48, ranked above 79.5% of its peers. Also, it might make a case for undervalued biotech stocks. ALT trades at 1.49 times its tangible book value, favorably below almost 68% of its rivals. Lastly, analysts peg ALT as a consensus strong buy. Their average price target is 26.14, implying nearly 400% upside potential.
AC Immune (ACIU)
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Hailing from Switzerland, AC Immune (NASDAQ:ACIU) pioneers new ways to diagnose, treat and prevent neurodegeneration. Specifically, AC Immune targets Alzheimer’s disease, Parkinson’s disease, and certain rare indications. However, success in this subsegment is incredibly elusive and you only need to look at ACIU’s chart to appreciate this. Since the Jan. opener, shares fell 13%. In the trailing one-year period, they’re down nearly 48%.
Because of its scientific relevance, ACIU could rank among the biotech stocks to buy and hold. Still, on the financial front, it’s a mixed bag. As with other riskier enterprises in the space, profit margins sit well into negative territory. Also, AC suffers from negative sales growth.
On the flip side, the company benefits from a stout balance sheet. Right now, its cash-to-debt ratio pings at 43.78, above 69.16% of the competition. Also, ACIU could be one of the undervalued biotech stocks with a low multiple of 1.26 against tangible book value. On a final note, analysts peg ACIU as a consensus moderate buy. Their average price target stands at $16, implying over 733% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
