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Wall Street analysts probably spend more time thinking about stock prices than you do. Because that’s their main job. That doesn’t mean they’re always right, but it does suggest that there’s a lot to learn from understanding those estimates and thinking about how they are created.
In that regard, analysts predict that two biotech stocks in particular could more than double their current value within the next 12 months, in line with consensus expectations. There’s no guarantee either will happen, but there’s still a good chance the value will rise significantly.
So let’s analyze what’s going on in each and see if it’s worth investing in.
1. Ginkgo Bioworks
Ginkgo Bioworks (NYSE: DNA) The company aims to do for biopharmaceutical companies what semiconductor foundries do for chip developers. That means implementing and manufacturing complex components and complex product designs at a lower cost than could be achieved in-house. Broadly speaking, this business model is common in the industry, but analysts have no doubt calculated that the company’s twist on the concept will make it a worthwhile stock to own. There is.
While other clinical research organizations (CROs) and clinical manufacturing organizations (CMOs) aim to become turnkey solutions, Ginkgo is going a step further by leveraging automation technologies such as robotics and artificial intelligence (AI). Hats off to you, scale up, and meet different customer needs simultaneously and at lower cost. With that in mind, there are several factors that could prompt investors to bid on Ginko stock in 2024.
First, we will continue to introduce dozens of new programs while reducing operating expenses. If management’s theory is correct and bioengineering and biomanufacturing can capture economies of scale at the same time, more profits will be made and costs will be reduced at the same time. Still, analysts expect the company’s sales to rise by an average of 8% to $280 million, and the biotech is expected to be far from profitable by the end of the year.
The second factor is the scale and prestige of the newly announced collaboration program. It is inevitable that most new programs launched by the company will not be noticed by the market, even if the partner is a well-known company such as: pfizer, novo nordiskor Merck, all of whom are already collaborators. That could change if a multibillion-dollar deal is brokered or if a major biopharmaceutical company opts for a broader strategic agreement in which Ginko takes over a large portion of manufacturing activities within a particular industry. expensive.
While such an announcement may seem unlikely, and is far from unlikely on any given day, the prospect is rapidly becoming more and more likely. This could be the driving force behind the stock price doubling sooner or later.
2. Ivans Biotherapeutics
Ivans Biotherapeutics (NASDAQ:IOVA) is a traditional biotechnology company developing medicines to treat melanoma, non-small cell lung cancer (NSCLC), cervical cancer, and other similar conditions.
On February 16th, Food and Drug Administration (FDA) regulators approved approval of the company’s advanced melanoma drug candidate Rifilucel, which could very well double its price. This is the first time that it has been commercialized under the brand name Amtagvi. . The approval came about a week earlier than expected, but it was a very small bullish move for the stock.
Now, the drug could hit the market more or less immediately and start generating revenue for the company for the first time in the second quarter.
Getting the first approved drug is a big milestone for any biotech stock, but in the case of Iovance, the real benefits may be just around the corner. Now that the lead candidate has been approved, the next step is to test its utility in combination with other drugs and to treat different types of melanoma, and ultimately in combination with other drugs. Continue to advance ongoing clinical trials aimed at expanding the set of approved indications by testing utility. Totally cancerous.
Management believes that such a move will dramatically expand the addressable market size and nearly double the number of patients served. But with $429 million in cash, restricted cash, cash equivalents, and short-term investments at the end of the third quarter, the company currently only has enough cash to last until 2025. That’s why this biotech company is looking to raise significant funding. The new stock issue will cost $211 million and is expected to close on February 22nd.
Assuming the offering works as planned, Iovance will have enough cash to buy time to launch Amtagvi and resolve issues with its distribution. For now, the biggest risk for investors is that the market has already priced in the benefits of the upcoming influx of selling. However, there is still a lot of upside, according to analysts’ predictions, and based on the biotech’s recent achievements, there is a good chance that their predictions will come true.
Should you invest $1,000 in Ginkgo Bioworks right now?
Before buying Ginkgo Bioworks stock, consider the following:
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Alex Karkidi has no position in any stocks mentioned. The Motley Fool has positions in and recommends Iovance Biotherapeutics, Merck, and Pfizer. The Motley Fool recommends Nordisk. The Motley Fool has a disclosure policy.
2 Top Biotech Stocks Wall Street Thinks Will Double in Value Soon was originally published by The Motley Fool
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