On February 5, J.P. Morgan shared its views on trends that are expected to define healthcare in 2026. The firm shed light on the biopharma segment, which is entering 2026 with renewed momentum and a compelling case for investors paying attention. After a slower stretch, mergers and acquisitions are picking back up and for good reason. Many major biopharma companies are sitting on a ticking clock: patents for some of their biggest drugs are set to expire in the coming years, meaning cheaper generics will soon eat into their revenues. To stay ahead, they’re hunting for deals that can keep their pipelines elevated and their growth intact.
The mood across the industry reflects this shift. Investors are feeling more optimistic, particularly about smaller biopharma companies that have solid drugs in development and a clear path to value. Adding to that, biotech and digital health are increasingly converging, with more capital flowing towards companies that combine advanced therapies with data and technology. With more deals expected throughout 2026 and several key clinical results on the horizon, there’s a real opportunity for investors willing to do their homework.
So which biopharma stocks are worth watching right now? Let’s explore our 10 Most Shorted Biotech Stocks to Buy According to Hedge Funds.
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Our Methodology
To identify relevant stocks for this article, we screened U.S.-listed biotechnology companies with market capitalizations above $2 billion. Also, we only shortlisted stocks with a short interest ratio greater than 15%, and at least 15% upside potential according to TipRanks consensus, as of March 6 closing.
Next, we identified the number of hedge funds holding positions in these stocks as of the end of the fourth quarter of 2025. Finally, we selected 10 stocks with the highest number of hedge funds holding stakes and ranked them in ascending order.
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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
10. CRISPR Therapeutics AG (NASDAQ:CRSP)
CRISPR Therapeutics AG (NASDAQ:CRSP) is one of the 10 most shorted biotech stocks to buy according to hedge funds.
On February 17, Morgan Stanley increased its price target on CRISPR Therapeutics AG (NASDAQ:CRSP) from $32 to $33, while maintaining an Underweight rating on the stock.
The firm updated its estimates for CRISPR Therapeutics AG (NASDAQ:CRSP) and evaluated additional pipeline advancements after its partner Vertex Pharmaceuticals (VRTX) disclosed fourth-quarter sales data of Casgevy.
On February 13, Needham increased the firm’s price target on CRISPR Therapeutics AG (NASDAQ:CRSP) from $80 to $82. The firm maintained its Buy rating on the shares that offer more than 45% upside potential after the revision.
Following the company’s Q4 results, the firm noted that Casgevy generated $116 million in sales in 2025, surpassing Vertex’s previously stated target of approximately $100 million. The stronger-than-expected sales performance highlights early commercial traction for the therapy, supporting a positive outlook for the company.
CRISPR Therapeutics AG (NASDAQ:CRSP) is a gene editing company developing potentially curative medicines for serious diseases. Their groundbreaking therapy CASGEVY targets sickle cell disease and blood disorders, while their broader pipeline tackles cancer, autoimmune conditions, and diabetes. This has positioned them as a leader in the future of genetic medicine.
