3 Strong Buy Biotech Stocks to Add to Your February Must-Watch List
Biotechnology companies are within an ever-changing segment of the stock market. They are some of the most volatile stocks in the market, which may be why investors flock to or avoid these companies.
The biotech industry is one for investors looking for massive growth potential because news regarding a clinical trial or earnings results could send a company’s share price soaring or plummeting. If investors find the right company, they could see their returns even double within a reasonably short time frame.
Below are a few biotech stocks that are strong buys and offer investors great growth opportunities within the industry.
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Zymeworks (ZYME)
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Zymeworks (NASDAQ:ZYME) is a biopharmaceutical developer that focuses on the commercialization of treatments for cancer. It has multiple partnerships for preclinical and phase one trials, including Merck & Co (NYSE:MRK) and Johnson & Johnson (NYSE:JNJ).
On Nov. 11, ZYME reported earnings results for the third quarter of 2023, stating that total revenue has grown more than sixfold and its net loss shrank by 40%. Compared to the year before. Zymeworks mentioned in the press release that it expects future growth due to an expanding product line.
The massive deal by AbbVie (NYSE:ABBV), a large-cap pharmaceutical manufacturer, in which it acquired ImmunoGen (NASDAQ:IMGN), a producer of antibody-drug conjugates, at the end of 2023, resulted in a ripple effect among other antibody drug-conjugates focused companies like Zymeworks which has experienced a rise in share price.
Zymeworks has seen its share price remain stagnant for the past two years, but within the last six months, it has surged by over 50% due to increased earnings growth and product rollout, along with the increased attention given to antibody-drug conjugates producers. This may result in the future approval of zanidatamab, a treatment that Zymeworks partners Jazz Pharmaceuticals (NASDAQ:JAZZ) and BeiGene (NASDAQ:BGNE) have been developing, and if commercialized, it would give Zymeworks a significant revenue stream—setting up the company to be on the watch list for any investor seeking exposure to the healthcare sector.
Ardelyx (ARDX)
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Ardelyx (NASDAQ:ARDX) is a pharmaceutical company that produces treatments for irritable bowel syndrome and chronic kidney disease.
Over the past six months, its share price has more than doubled from positive earnings results and increased sales guidance. On Oct. 31, Ardelyx reported earnings for the third quarter of 2023 in which it stated that its total revenue for Q3 2022 was $5 million and for Q3 2023, it was $56 million, which was primarily from increased sales of Ibsrela, its irritable bowel syndrome treatment. Within the same time period, its net loss of $23 million improved to net income of $7 million.
Xphozah, a chronic kidney disease oral medication, another flagship treatment provided by Ardelyx, was recently approved by the FDA and is available for sale in the U.S.
ARDX has been on a tear recently with a slew of positive news relating primality to its medication Ibsrela, which is experiencing massive success and continuing to blow past sales expectations. Its stock surged by nearly 50% following a report that Ibsrela could supply Ardelyx with $1 billion in revenue in 2024 compared to only $80 million in 2023.
Along with the resounding success of Ibsrela, ARDX still has another medication that has shown positive results directly following approval by the FDA in Xphozah. Ardelyx is a strong buy biotech company that investors should significantly consider adding to their portfolio.
Natera (NTRA)
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Natera (NASDAQ:NTRA) primarily engages in the production of diagnostic testing services within the areas of women’s health, oncology, and organ health.
Over the past year, Natera has seen its share price rise by 57%, primarily due to improved earnings results reported on Nov. 8 for the third quarter, in which it stated that total revenue increased by 27% and its test processed grew 21% compared to the prior year. Natera also raised its annual guidance for revenue for the full year 2023.
In the past couple of months, Natera has been embroiled in multiple court trials regarding patient infringement, culminating in a ruling in favor of Natera following a lawsuit filed by CareDX (NASDAQ:CDNA), a similar medical diagnostic company. NTRA was awarded nearly $100 million in damages.
Natera has seen share price appreciation despite its recent patient infringement trail and impressive revenue growth in the third quarter. On Jan. 9, NTRA released preliminary revenue for the fourth quarter, which it expects to be approximately $300 million, a 12% increase based on Q3 2023 revenue. Natera would be a great addition to an investment portfolio and has been labeled a strong buy.
As of this writing, Noah Bolton did not hold (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.
Noah has about a year of freelance writing experience. He’s worked with Investopedia dealing with topics such as the stock market and financial news.
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