Wall Street Favorites: 3 Biotech Stocks With Strong Buy Ratings for January 2024
There is a lot of good news to digest from the biotech sector. Not only does it offer lots of strong stocks in January, but it is also expected to grow rapidly. Analysts expect compound annual growth approaching 13% between the years 2023 and 2030.
There’s a lot going on within the sector that will serve to prompt that growth. Artificial intelligence has important applications to the biotechnology sector. CRISPR gene editing technology continues to evolve including new applications at the commercial level. And the list goes on to include things like Quantum computing, for example.
Let’s take a look at three stocks from the sector that are particularly well rated on Wall Street.
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AbbVie (ABBV)
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AbbVie (NYSE:ABBV) doesn’t have an exceedingly impressive rating overall but remains a steady, improving stock to consider.
The narrative surrounding AbbVie continues to be dominated by sales of its blockbuster drug, Humira. The arthritis and Crohn’s disease therapeutic continues to decline overall as it comes off patent. Q3 revenues declined by 39% in the U.S. and 36% globally.
And Humira is such a large contributor to overall results that overall sales are also sliding. While that may not sound promising overall, the company is actually doing very well. It is actively replacing Humira’s declining sales with sales from emerging champions including Rinvoq and Skyrizi.
AbbVieCurrently has as many hold ratings as it does buy ratings from Wall Street. it’s clearly not the most favored biotech stock on the street. However, investors should consider that it’s an excellent dividend stock and the company is investing not only in its internal brand champions but also through acquisitions.
Essentially, it’s a steady investment with strong upside moving forward.
Eli Lilly (LLY)
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Eli Lilly (NYSE:LLY) had such a strong 2023 that investors might be wondering if it makes any sense to invest in the stock in January. According to at least one source the answer to that question is yes.
Wells Fargo analyst, Mohit Bansal believes Eli Lilly can rise higher still. He expects that the company will exceed 4th quarter expectations when it releases earnings on Feb. 6.
That’s welcome news for investors who watched Eli Lilly skyrocket throughout 2023 as Mounjaro became incredibly popular. The drug, indicated as a type 2 diabetes treatment, was also noted for its efficacy in weight loss. However, it wasn’t indicated as such a treatment by the FDA. It wasn’t until later, in November that the same drug was given FDA approval as a weight loss treatment under a different trade name.
Overall, LLY shares benefit from a ‘strong buy’ rating on Wall Street. The market for FDA approved weight loss drugs has just opened and Eli Lilly has a dominant position in that sector. Investors should not discount that fact.
Jazz Pharmaceuticals (JAZZ)
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Jazz Pharmaceuticals (NASDAQ:JAZZ) is also a highly rated biotech stock. It currently benefits from an ‘overweight’ rating on Wall Street. The consensus price target of those analysts suggests that an investment in Jazz Pharmaceuticals should yield 50% returns over the next 12 to 18 months.
That isn’t to say that Jazz Pharmaceuticals has provided investors with strong returns thus far. Instead, the stock has been a disappointment over the past few years producing double digit losses. It’s easy to argue that a lot of the positive sentiment around its shares is undeserved. Revenues have grown over that period and continue to grow per the most recent earnings report.
Yet, the company’s most promising drugs have yet to pan out. Growth from drugs like Epidiolex, Xyvaw, and Rylaze have been Strong but not extraordinary. Epidiolex is of particular interest. The company continues to tout its potential as a differentiated treatment with blockbuster upside. The company has multiple 2024 U.S. launches ahead for Epidiolex which is part of the reason there is so much upside. It continues to be a wait and see type of investment.
On the date of publication, Alex Sirois 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.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.
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