In this article, we will look at the 10 Best Low-Priced Biotech Stocks to Buy Now.
Is Now the Time to Buy Biotech Stocks?
On May 8, Michael Yee, Senior Biotech Analyst at Jefferies, appeared on CNBC to discuss how tariffs and policy risks are pressuring the biotech industry, while simultaneously iterating that low valuations in the sector may present buying opportunities once the uncertainty clears.
Talking about the broader impact of tariffs on the biotech sector, he said that the estimated tariff rate would be around 50%, while the negative EPS impact would be around -4-5%. According to Yee, the sector is facing several challenges that have caused significant pressure and anxiety among biotech investors. One of them is definitely sector-specific tariffs. The 50% estimation is a manageable impact for many of the biotech companies, but there are also other challenges being floated. Another factor is the most favored nations that could drop drug prices by as much as 40% to 50%, making it a related impact. Assuming all these impacts are going into place, there are definitely uncertain downside risks to the model.
However, the takeaway is that many of these stocks are down more than 20-30% and, in fact, are trading at a decade-low P/E multiple. Therefore, while these uncertainties may be out there over the next few weeks or months, the stocks are expected to move higher after that. If we look back at some other stocks with tariffs, many are obviously higher off the bottoms. They have thus fallen to an attractive valuation, which is why there might be an opportunity to buy them.
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Does the US Pay More For Drugs Than Other Countries?
Shedding light on the most favored nation policy, Yee said it is not new. It is also not a new concept that the US, on average, pays around 40% to 50% more for drugs as compared to the basket of other, say, five to ten major developed nations. The country also gets its drugs faster, and is the home of innovation.
Many of the pharmaceutical company executives over the past few weeks pointed out that most of those countries are also facing downside issues because of R&D investments, getting the drugs years later, and obviously, the countries aren’t benefiting from access to any of these drugs. However, the United States government does negotiate 15-20 drugs per year and will be doing that for the next decade.
With these trends in view, lets look at the 10 best low-priced biotech stocks to buy now.
A biotechnologist in a white lab coat manipulating genes in a laboratory.
Our Methodology
We sifted through stock screeners, financial media reports, and ETFs to compile a list of 50 low-priced biotech stocks and then chose the top 10 with the highest number of hedge fund holders as of Q4 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is ordered in ascending order of hedge fund sentiment.
Note: The data was recorded on May 9.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 363.5% since May 2014, beating its benchmark by 208 percentage points (see more details here).
10 Best Low-Priced Biotech Stocks to Buy Now
10. Wave Life Sciences Ltd. (NASDAQ:WVE)
Stock Price: $6.58
Number of Hedge Fund Holders: 34
Wave Life Sciences Ltd. (NASDAQ:WVE) is a clinical-stage biotechnology company that develops and commercializes ribonucleic acid (RNA) medicines through PRISM, a discovery and drug development platform. PRISM combines a deep understanding of human genetics with chemistry innovation and multiple modalities for scientific discoveries and breakthroughs that treat prevalent and rare disorders.
It is developing treatments for obesity and other metabolic disorders, Duchenne muscular dystrophy, Huntington’s disease (HD), and alpha-1 antitrypsin deficiency. The company ranks tenth on our list of the best low-priced biotech stocks to buy now.
On May 9, analyst Andrew Fein of H.C. Wainwright maintained a Buy rating on Wave Life Sciences Ltd. (NASDAQ:WVE), retaining the price target of $22.00. The analyst based the rating on the company’s promising clinical data and innovative approach, detailing that its WVE-007 program targeting weight loss reflects significant growth potential. This holds especially true if the drug’s kinetics have a more targeted effect on fat than muscle.
Wave Life Sciences Ltd. (NASDAQ:WVE) is also advancing its RNA editing technology, which may offer a controlled method to produce functional proteins that have potential benefits for lung and liver health. The company’s RNA editing trials have produced early data suggesting a promising future for their treatment, and the analyst even considered the possibility of a once-monthly dosing regimen.
9. 89bio, Inc. (NASDAQ:ETNB)
Stock Price: $7.70
Number of Hedge Fund Holders: 35
89bio, Inc. (NASDAQ:ETNB) is a clinical-stage biopharmaceutical company that develops and commercializes innovative therapies to treat liver and cardiometabolic diseases. The company’s product pipeline includes pegozafermin, FGF21, NASH, and SHTG.
On April 29, Leerink Partners analyst Thomas Smith reiterated his bullish stance on the company, giving a Buy rating due to its strong position in the biopharma sector. 89bio, Inc. (NASDAQ:ETNB) reaffirmed its clinical data timelines for pegozafermin, its lead asset for NASH and severe hypertriglyceridemia. It is undergoing robust operational execution, with phase 3 trials proceeding on timeline.
The analyst further supported pegozafermin’s potential as a best-in-class treatment with a favorable safety profile and competitive efficacy. It also has an optimistic market potential as interest in the FGF21 mechanism, which is targeted by the treatment, is growing among patients and clinicians. Smith has a $37 price target for ETNB stock.
