While the health innovation space presents wild risks, you could potentially swing the odds in your favor with strong buy biotech stocks. Specifically, these ideas represent publicly traded biotechnology firms that enjoy the highest possible consensus rating among Wall Street analysts.
So, what’s the key advantage regarding these analyst-endorsed biotech stocks to buy? Fundamentally, you’re receiving an expertly curated and aggregated portfolio of compelling health innovators. Let’s face it – your average retail investor doesn’t have the time to sift through every opportunity, especially in a specialized field like biotech. This is about leveraging expert guidance in your favor.
A secondary catalyst for heralded biotech stocks to buy centers on crowd appeal. Basically, investors of all classes pay attention to the Street’s endorsements. Therefore, careful exposure to these curated ideas can be incredibly beneficial for your portfolio. To be 100% clear, all of the below companies should be considered extremely speculative. Still, if you’re looking for high-potential returns, these strong buy biotech stocks might be just what the doctor ordered.
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A leading provider of home and alternate treatment site infusion services, Option Care Health (NASDAQ:OPCH) isn’t directly one of the strong buy biotech stocks. Rather, it’s part of the healthcare services industry. Nevertheless, Option Care features a close relationship with biotechs because its patient base includes those suffering from chronic conditions, which often involves innovative therapeutic solutions.
One element that should better encourage on-the-fence investors is recent insider transactions. According to investment data aggregator Gurufocus, the latest three transactions were buys. Notably, in August, a company director acquired 55,000 shares of OPCH stock, implying confidence in its upward trajectory.
Looking at the financials, Option Care enjoys a three-year revenue growth rate of 13.6%, above 64.75% of its peers. Also, its EBITDA growth rate during the same period impresses at 73.5%. Finally, analysts peg OPCH as a unanimous strong buy among five expert voices. On average, the price target lands at $42.40, implying over 26% upside potential.
MoonLake Immunotherapeutics (MLTX)
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Based in Switzerland, MoonLake Immunotherapeutics (NASDAQ:MLTX) is a clinical-stage biotech firm that utilizes its proprietary Nanobody technology to create advanced treatments for immunologic conditions. Specifically, MoonLake targets inflammatory skin and joint diseases. It further develops solutions for addressing several other inflammatory diseases in both the dermatology and rheumatology sectors. Since the start of the year, MLTX has gained over 403%.
Now, with such a performance, investors may be worried about holding the bag. However, insiders have been actively buying shares. It’s a freshly minted company, founded in 2020, so it doesn’t have an extensive record. Still, of the three insider transactions that have been recorded, all of them have been buys.
Another factor that may help MLTX as one of the biotech stocks to buy is the options market. Notably, Fintel’s options flow screener – which targets big block trades likely made by institutions – appears to show a net sentiment tilt for optimist trades. Lastly, analysts peg MLTX as one of the strong buy biotech stocks with a $70.50 price target, implying 27% upside.
Akero Therapeutics (AKRO)
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Headquartered in South San Francisco, California, Akero Therapeutics (NASDAQ:AKRO) focuses on developing and commercializing transformation treatments for patients with serious metabolic diseases. One of its primary focus areas centers on non-alcoholic steatohepatitis (NASH), which is a severe form of fatty liver disease. Moreover, NASH represents a growing public health concern due to its potential to progress to more serious conditions.
To be fair, Akero’s insider transactions have recently tilted sharply toward the divesture end. Still, an Akero director in two separate transactions bought a combined total of 80,000 shares in early August. This provides some confidence that AKRO could be one of the biotech stocks to buy.
In addition, institutional traders appear quite bullish on AKRO. On Sept. 14, a major trader (or traders) bought 5,650 contracts of the Jan 19 ’24 75.00 Call, per Fintel. More tellingly, the premium paid for this transaction came out to $2.94 million. This premium represents a standard deviation of 2.03 against the norm. In closing, analysts rate AKRO as one of the unanimous strong buy biotech stocks with a $67.75 target, implying almost 49% growth.
CymaBay Therapeutics (CBAY)
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Headquartered in Newark, California, CymaBay Therapeutics (NASDAQ:CBAY) is a clinical-stage biopharma focused on developing therapies for liver and other chronic diseases. One of its leading therapies is seladelpar, a potent and selective agonist of peroxisome proliferator-activated receptor delta. Seladelpar has been evaluated for potential use in liver diseases such as primary biliary cholangitis (PBC) and NASH.
Since the start of the year, CBAY has jumped to a nearly 149% lead. Over the trailing one-year period, shares skyrocketed to the tune of over 326%. Naturally, outside observers may question the continued viability of such an outperformer. Still, institutional traders appear bullish on CymaBay.
Looking at Fintel’s options flow data, a big trader appears to have bought 2,150 contracts of the Oct 20 ’23 13.00 Call. The premium paid for this transaction came out to $640,000, representing a standard deviation of 2.19. Also, CBAY ranks as one of the unanimous strong buy biotech stocks among 11 analysts. The average price target is $22.27, implying over 50% growth.
Olema Pharmaceuticals (OLMA)
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Hailing from San Francisco, Olema Pharmaceuticals (NASDAQ:OLMA) is a clinical-stage biopharma focused on the discovery, development, and commercialization of targeted therapies for women’s cancers. One of its main compounds is OP-1250, which Olema develops for the treatment of a specific form of breast cancer. Given the extraordinary need and relevancy, OLMA shot up over 387% since the beginning of this year.
Looking at insider transactions, one might initially come away with a pessimistic view. After all, insider sales appear to overwhelm the buys recently. Nevertheless, Biotechnology Value Fund LP recently bought over 1.5 million shares. That’s a massive confidence boost that could help frame your search for biotech stocks to buy.
In fairness, Olema doesn’t exactly have the greatest financials. Still, what I appreciate here is that it commands a cash-to-debt ratio of 83.39X, better than 75% of the competition.
Turning to the Street, analysts peg OLMA as one of the unanimous strong buy biotech stocks. As well, the average price target hits $22.17, implying over 72% upside.
RAPT Therapeutics (RAPT)
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Another clinical-stage biopharma located in South San Francisco, RAPT Therapeutics (NASDAQ:RAPT) focuses on the development and commercialization of oral small molecule therapies designed to modulate immune responses contributing to various diseases. Per its website, RAPT targets specific immune responses related to disease conditions, mainly inflammation and cancer.
Compared to other strong buy biotech stocks, RAPT Therapeutics will arguably require more patience. Since the start of this year, shares have slipped more than 10%. And in the trailing 365 days, they’re down over 30%.
When it comes to the derivatives market, traders appear bullish on RAPT but also recognize the risks. For instance, the implied volatility (IV) curve swings to a peak of 294% in the far out-the-money (OTM) call direction. However, IV also peaks at 491% in the far OTM put direction. So, there appears to be optimism but also hedging going on. Now, what might seal the deal is that analysts rate RAPT as a unanimous strong buy. Moreover, the average price target clocks in at $35.50, implying almost 113% upside.
Sensus Healthcare (SRTS)
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Headquartered in Boca Raton, Florida, Sensus Healthcare (NASDAQ:SRTS) is a medical device firm specializing in highly effective, non or minimally invasive, and cost-effective treatments for both oncological and non-oncological conditions. Mainly, Sensus focuses on skin cancer and keloids with its superficial radiation therapy (SRT). As a non-surgical approach, SRT holds great promise to treat non-melanoma skin cancers and keloids.
Still, as encouraging as the scientific backdrop is, Sensus is incredibly risky. Since the beginning of this year, SRTS has fallen almost 63%, which is not something to gloss over. At the same time, it could be one of the strong buy biotech stocks to consider based on its insider transactions. Indeed, the most recent trades since May of this year have all been insider acquisitions.
Looking at the derivatives market, the IV curve for SRTS options swings from a low of 55% at the $2.50 strike to 447% at the $12.50 strike. You don’t want to read too much into this as the options market for SRTS is relatively limited. Still, in combination with the insider acquisitions, it presents an enticing framework. Finally, analysts peg SRTS as a unanimous strong buy with an $8 target, implying over 204% growth.
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. Tweet him at @EnomotoMedia.
