Biotech stocks are a polarizing area of the market for many investors. On one hand, these companies have the potential to develop life-changing products that can lead to massive price upside for investors. On the other, investors are always at the mercy of FDA approvals and headlines which can expose them to significant downside risk should these companies fail to deliver positive results. This is a big reason why biotech is one of the most high-risk, high-reward sectors of the stock market, yet there’s still a strong case to be made for adding them into your investment plans.
Focusing on quality names in the sector that already have positive catalysts working in their favor is a great way to dip your toes into biotech investing and capture some of that upside we mentioned earlier. With healthcare in focus as the world comes to grips with the pandemic, many of these companies have a golden opportunity to deliver incredible returns to investors over the next few years.
There are several promising companies in the sector that could be good buying opportunities at this time, which is why we've put together a list of the 3 best biotech stocks to buy now. Let's take a more in-depth look below.
1. Moderna
This biotech stock is the perfect example of just how much upside these types of companies have. Moderna (NASDAQ:MRNA) has rallied over 321% year-to-date and has been holding up quite well during the recent market weakness, which tells us buyers are still scooping up shares even after the stock’s monumental run. As a company that is focused on creating transformative medicines based on messenger RNA (mRNA), Moderna’s medicines have the potential to help with a huge spectrum of different diseases and illnesses. The company is already generating billions with its COVID-19 vaccine, which according to a recent study published by the CDC, is the most effective at protecting against hospitalizations.
It’s worth noting that Moderna has secured advance COVID-19 vaccine purchase agreements for about $20 billion for the year 2021, with orders also confirmed for 2022 and 2023 as well. That means the company has an established revenue stream that investors can count on, and if its vaccine receives full FDA approval in the coming months it will only add to the narrative that Moderna has one of the most efficient COVID-19 vaccines on the market. The company’s pipeline also has some intriguing candidates, including a Cytomegalovirus vaccine, a Zika vaccine, a flu vaccine, and an HIV vaccine. With plenty of cash rolling in from Moderna’s COVID-19 vaccine, the company can invest heavily in new opportunities, which is another reason why it’s one of the best biotechs to consider buying.
2. Illumina
If you’re interested in a quality biotech name trading at a deep discount, Illumina (NASDAQ:ILMN) is a stock that should be on your radar. This company provides sequencing and array-based solutions for genetic analysis, with products that are sold to genomic research centers, academic institutions, hospitals, and more. Genetic variation can potentially help to account for things like predispositions to diseases and is a field of medicine that has tons of potential over the next decade, and Illumina’s products such as NovaSeq, a DNA sequencing machine, are used to help unlock the secrets of the human genome.
The stock has been facing heavy selling pressure due to regulatory concerns about the company’s $7.1 billion acquisition of cancer detection firm GRAIL, which could lead to penalties such as a fine from the EU. With that said, the selling has likely been overdone, and the deal should ultimately lead to strong synergies for Illumina. This company’s machines are also important for tracking and monitoring the spread of new variants of the COVID-19 virus, which is another strong reason to consider adding shares. Illumina is trading around its 200-day moving average and could be a bargain at current prices, which is why it makes this list.
3. Regeneron Pharmaceuticals
Finally, we have Regeneron Pharmaceuticals (NASDAQ:REGN), a company that discovers, invents, develops, manufactures, and commercializes medicines for the treatment of serious diseases such as cancer, dermatitis, rheumatoid arthritis, and eye diseases. You might be familiar with Regeneron’s double-antibody cocktail therapy, REGN-COV, which is used to treat mild to moderate coronavirus disease and can potentially prevent severe symptoms. This treatment has received emergency use authorization from the FDA and seeing an increase in demand as the Delta variant of the virus spreads, which means it should be a strong revenue stream for the company in the coming quarters.
Although REGN-COV generated $2.76 billion in Q2 revenue for the company, Regeneron has other successful drugs that round out a diverse portfolio. The company’s Eyelea drug for age-related macular degeneration has been a huge commercial success, and drugs like Dupixent and Libtayo could also be strong growth drivers for investors to consider. The bottom line is that Regeneron has been one of the standouts in the biotech sector this year and a company that has already developed several impressive drugs, which makes it a solid pick for any investor interested in biopharmaceutical companies.