The biotech industry is notably risky, but can produce stocks that see massive gains within a day. How can this happen? Well, many of these companies depend on FDA approval for their drugs to enter the market. This is essential since the drug sales comprise a large portion of these companies’ revenue. However, many of these companies are in the very early stage of production and research with many potential drugs. In the early clinical trials phases, many of these drugs may be promising but soon lose potential. That’s why if a drug makes it through all the phases, it can be a big deal for the company.
However, finding the companies that are likely to produce big breakthroughs or continue capitalizing off of their current ones can be difficult. Thus, we have done the work for you and present you with three cheap biotech stocks to buy now.
Vertex Pharmaceuticals (VRTX)
Vertex Pharmaceuticals (NASDAQ:VRTX) is a company that is the dominant player when it comes to the treatment of cystic fibrosis. The stock is up over 20% in the past year. In addition, Yahoo! Finance analysts have an average one-year price target of $466.90. This still gives the stock plenty of room upward from its current price of around $422.
Recently, the company received FDA approval for its drug Casgevy. Casgevy is the first sickle cell disease treatment that has been approved so far in the U.S.
Looking at the financials of the company, it is in a solid place. In 2023, it reported revenue of over $9.8 billion with analysts expecting double-digit growth rates going forward. With its P/E ratio of only 24.97x being below its five-year average P/E of 26.82x, it makes this stock a favorable addition to any investor’s portfolio.
Novavax (NVAX)
Novavax (NASDAQ:NVAX) is a small biotechnology company that specializes in developing vaccines for infectious diseases. Some of its most noteworthy contributions include its work helping fight influenza, Ebola and other respiratory viruses. Yahoo! Finance analysts currently project a very bullish one-year price target for this company, ranging from an average of $15.40 to a high of $38.
One of the biggest up-and-coming catalysts for NVAS is its partnership with Sanofi (NASDAQ:SNY). This partnership valued at up to $1.2 billion is set to help commercialize Novavax’s adjuvated Covid-19 vaccine across the world. Management expects this expansion to help Novavax cultivate value globally and obtain the capital needed to continue pushing its operations to the future.
Novavax recently reported mixed Q1 2024 results, showing a beat on EPS, but a slight miss on revenue. Overall, however, the company’s 16% revenue growth and net loss decrease of around 50% has made investors optimistic. With an EV/sales ratio of 0.95x sitting extremely discounted compared to the sector median of 3.5x, and a stock price just under $10, NVAX is certainly a cheap biotech stock worth checking out.
Actinium Pharmaceutical (ATNM)
Actinium Pharmaceutical (NYSE:ATNM) is a late-stage biopharmaceutical company that focuses on targeted radiotherapies for those who have failed existing oncology therapies. Analysts have recently shifted their projections as the company becomes poised to become a target of radiopharmaceutical mergers or acquisitions. Wall Street analysts currently see a one-year price target between an average of $25.47 and a high of $50.
The company’s key product candidate, Iomab-B, has recently entered the limelight. After promising clinical results, the drug is set to increase survival rates in patients and target leukemia-related antigens. While this company’s products are still largely in the clinical stages, final approvals and potential strategic partnerships are bound to support ATNM’s growing market position.
Given the companies clinical stage position, its financials are truly hard to evaluate. While its recent Q1 earnings reported no revenue, development and profitability figures were beat with a reported EPS of -$0.31 instead of -$0.52. For risk-taking investors interested in deep research into potential diamonds in the biotech industry, Actinium Pharmaceutical is definitely a cheap pick to start looking into.
On the date of publication, Ian Hartana and Vayun Chugh did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.