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The Zacks Analyst Blog Highlights: BioDelivery, Cytokinetics, Celldex, Aduro and Aeterna

Zacks Equity Research

For Immediate Release

Chicago, IL –February 14, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: BioDelivery Sciences International, Inc. BDSI, Cytokinetics, Inc. CYTK, Celldex Therapeutics, Inc. CLDX, Aduro Biotech, Inc. ADRO and Aeterna Zentaris Inc. AEZS.

Here are highlights from Wednesday’s Analyst Blog:

5 Tiny Biotechs with Superb Growth Potential

Market watchers still quibble over whether the equity market entered bear market territory or underwent a correction in year-end 2018. But there is little debate over the fate of pharma stocks during this period. The sector plummeted last fall with the SPDR S&P Biotech ETF falling 35% from the peak achieved in September. This is a bear market in no uncertain terms.

However, biotech got off to a far better start this year, with the XBI up 17.7% year to date. A spate of deal-making revived the sector in January, marked by some of the largest mergers in the history of the industry.

While the specter of pricing pressure hangs over biotech, the sector retains the ability to provide outsized gains. For investors with a substantial risk appetite, biotech retains the promise of strong returns in 2019. This is why it makes sense to pick up strong, cheap performers from the sector, priced below $10. 

2019 to Witness Spurt in Deal-Making

Earlier in January, Bristol-Myers Squibb announced it was purchasing Celgene for $74 billion in a cash and stock deal. The very next week, Eli Lilly said it was acquiring cancer drug marker Lexi Oncology for $8 billion. This continued last year’s trend of frenetic deal making. Notably, Takeda Pharmaceuticals acquired Shire for $59 billion.

And healthcare sector deals are likely to increase 7% over last year to $331 billion in 2019. This prediction was made in a report issued jointly by Oxford Economics and Chicago-based law firm Baker McKenzie. This is a welcome change from the 5% decline experienced last year. It also does not include the deals involving Eli Lily and Bristol-Myers Squibb.

Pricing Pressure Likely, Ability to Boost Gains Remain

Following the recent mid-term elections, frenetic legislative activity is being witnessed on the pricing pressure front. At this point, it seems that Democrats and Republicans may yet make common cause on the issue. However, the Trump administration’s proposal to crack down on pharmacy benefit managers (PBMs) could spare the pharma industry some blushes.

Ultimately, the industry will have to learn how to survive in an increasingly cost-conscious environment. However, pharma companies that are able to produce truly innovative treatments retain the potential of generating outsized profits. This is because they are able to erect formidable competitive moats in the process.

Further, any positive data on drug trials and approvals creates significant excitement and could boost the pharma stock in question considerably. At the same time, several sector members are small-cap stocks in terms of market capitalization. Their small size and low float provide them with the ability to surge in the event of any positive news.

Our Choices

After a disastrous end to 2018, pharma stocks have started the New Year on a considerably strong note. A flurry of deal-making in January has boosted the sector and M&A activity is likely to remain strong through most of the year. While the specter of pricing pressure remains, the sector retains the ability to deliver outsized gains.

This is why it makes sense to invest in select biotech stocks, which aren’t a pinch on your pocket as they are trading below $10. We have narrowed our search to the following stocks based on a good Zacks Rank and other relevant metrics.

BioDelivery Sciences International, Inc. is a specialty pharmaceutical company focused on the development and commercialization of treatments in the areas of pain management and drug addiction.

BioDelivery Sciences has a Zacks Rank #1 (Strong Buy). The company has expected earnings growth of 68.2% for the current year. The Zacks Consensus Estimate for the current year has improved by 12.7% over the last 30 days. The stock’s last closing price is $4.36.

Cytokinetics, Inc. is a late-stage biopharmaceutical company focused on discovering, developing and commercializing first-in-class muscle activators as potential treatments for debilitating diseases.

Cytokinetics’s expected earnings growth for the current year is 11.9%. The Zacks Consensus Estimate for current-year earnings has improved by 0.2% over the past 30 days. The stock’s last closing price is $7.58. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Celldex Therapeutics, Inc. is a development-stage biopharmaceutical company focused on the development and commercialization of immunotherapy technologies and other cancer-targeting biologics.

Celldex Therapeutics has a Zacks Rank #2 (Buy). The company has expected earnings growth of 60% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 15.8% over the past 30 days. The stock’s last closing price is $4.99.

Aduro Biotech, Inc. is a development-stage biopharmaceutical company focused on the discovery, development and commercialization of therapies for challenging diseases.

Aduro Biotech has a Zacks Rank #2. The company has expected earnings growth of 34.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 32.2% over the past 30 days. The stock’s last closing price is $3.50.

Aeterna Zentaris Inc. is a biopharmaceutical company focused on endocrine therapy and oncology.

Aeterna Zentaris has a Zacks Rank #2. The company has expected earnings growth for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved by more than 100% over the past 30 days. The stock’s last closing price is $4.15.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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BioDelivery Sciences International, Inc. (BDSI) : Free Stock Analysis Report
 
AEterna Zentaris Inc. (AEZS) : Free Stock Analysis Report
 
Aduro Biotech, Inc. (ADRO) : Free Stock Analysis Report
 
Celldex Therapeutics, Inc. (CLDX) : Free Stock Analysis Report
 
Cytokinetics, Incorporated (CYTK) : Free Stock Analysis Report
 
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