We recently published a list of 10 Best Low Priced Biotech Stocks to Buy Now. In this article, we are going to take a look at where Day One Biopharmaceuticals, Inc. (NASDAQ:DAWN) stands against other 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.
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).
A close-up of a scientist in a laboratory environment, working on a biopharmaceutical product candidate.
Day One Biopharmaceuticals, Inc. (NASDAQ:DAWN)
Stock Price: $6.45
Number of Hedge Fund Holders: 36
Day One Biopharmaceuticals, Inc. (NASDAQ:DAWN) develops and commercializes targeted therapies for genetically defined cancers in patients of all ages. Its products include DAY101 and pimsertib. It is the eighth-best low-priced biotech stock to buy now.
On May 7, analyst Andres Y. Maldonado from H.C. Wainwright reiterated a buy rating on the stock, keeping the price target at $36.00 and highlighting its promising trajectory. The analyst reasoned that the company’s OJEMDA product, which treats certain kinds of brain tumors, showed consistent growth, attaining considerable sequential revenue growth and a notable increase in cumulative prescriptions.
Day One Biopharmaceuticals, Inc. (NASDAQ:DAWN) is also advancing its pipeline through the FIREFLY-2 trial, which, according to the analyst, has the potential to bolster OJEMDA’s market position. The company has a robust strategy for long-term growth, which includes the promising early-stage development of its anti-PTK7 ADC and a focus on overcoming physician conservatism in pediatric oncology.
Overall, DAWN ranks 8th on our list of the best low priced biotech stocks to buy now. While we acknowledge the potential for DAWN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than DAWN but trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
