Stock Analysis & Ideas

Which Biotech Stock is the Street More Bullish on?

Story Highlights

The long-term growth potential for several biotech stocks looks attractive. So as per Wall Street analysts which biotech stock could be a good pick at the current levels?

The COVID-19 pandemic has brought healthcare and biotech companies to the forefront. It has made governments and the medical communities across the globe realize the amount of investment and focus required to develop new treatments, using advanced technologies to address unmet medical needs.

Amid the ongoing market downturn, investors can look for biotech companies with lucrative growth potential that are trading at attractive levels as per Wall Street analysts.  

Using the TipRanks Stock Comparison tool, we pit Gilead Sciences, Biogen, and IQVIA Holdings against each other to pick the better biotech stock.  

Gilead Sciences (NASDAQ: GILD)

Gilead’s COVID-19 treatment Remdesivir (sold under the brand name Veklury) was one of the first treatments to earn the U.S. Food and Drug Administration’s (FDA) emergency-use authorization and a full approval subsequently. Veklury’s sales came in at $1.5 billion in the first quarter, up 5% year-over-year. Gilead expects Veklury sales of about $2 billion this year, down from $5.6 billion last year.

Gilead also has a solid HIV portfolio, which contributed $3.7 billion or 57% of the overall Q1 product sales. It’s most notable HIV drug Biktarvy alone generated sales of $2.2 billion in Q1. However, the company is facing some pressure since the loss of exclusivity for its Truvada HIV drug in the U.S. in October 2020.  

Gilead is also focused on advancing its oncology portfolio. The company’s Q1 oncology sales jumped 60% to $420 million, fueled by higher demand for Trodelvy and cell therapy products.

Last month, SVB Leerink analyst David Risinger initiated coverage of Gilead with a Hold rating and a price target of $68.

Risinger noted that Gilead stock trades at a low P/E (price-to-earnings) multiple, but given the low-single digit earnings growth estimates (excluding-Veklury), he feels that the company needs to deliver compelling pipeline results to fuel stock outperformance.

Risinger expects Gilead’s HIV franchise to deliver modest sales growth over the near-term, and looks forward to oncology data readouts ahead to assess the company’s diversification initiatives and pipeline prospects.

Overall, the Street is cautiously optimistic on Gilead stock, with a Moderate Buy consensus rating based on five Buys and six Holds. At $70.90, the average Gilead price target implies upside potential of 13.97% from current levels.

Biogen (NASDAQ: BIIB)

Biogen is a biotech company focused on developing therapies for neurological diseases and related therapeutic adjacencies.

Biogen has been in the news due to its ill-fated Alzheimer’s drug Aduhelm, which was approved by the FDA in June 2021. Aduhelm was supposed to be a blockbuster drug for the company. However, concerns about the efficacy of the drug impacted its acceptance. Moreover, in April 2022, the U.S. Centers for Medicare and Medicaid Services decided to limit coverage of the drug to only the participants in a clinical trial.

Last month, along with its dismal first quarter results, Biogen announced that it will “substantially eliminate” the commercial infrastructure for Aduhelm following the disappointing Medicare coverage decision. To add to investors’ woes, Biogen also announced that its CEO Michel Vounatsos is stepping down and the company is now looking for his replacement.

Looking ahead, Biogen is focused on three regulatory filings and three readouts this year, including the Phase 3 readout for Lecanemab, an antibody for Alzheimer’s.

Recently, Biogen announced that the European Patent Office has granted a new patent to Tecifidera for treating multiple sclerosis at 480mg per day dose.

In reaction to this news, Cowen analyst Phil Nadeau commented, “However, the ability of the patent to limit the launches of the 3 generics approved in the EU during May is unclear. We assume that EU generics start taking share during Q2:22 and model ex-U.S. Tecfidera sales of $788MM in 2022 (-38% Y/Y). Lecanemab’s success is key to BIIB’s growth.”

Nadeau reiterated a Buy rating with a price target of $285.

On TipRanks, Biogen earns the Street’s Moderate Buy consensus rating based on 12 Buys and nine Holds. The average Biogen price target of $246.42 implies upside potential of 21.68% from current levels.

IQVIA Holdings (NYSE: IQV)

IQVIA provides advanced analytics, technology solutions, and clinical research services to the life sciences industry. Through IQVIA Connected Intelligence, the company delivers powerful insights that help customers accelerate the clinical development and commercialization of innovative medical treatments.

The company posted strong first-quarter results despite a tough macro backdrop and a decline in COVID-related work. Revenue grew 4.7% to $3.57 billion, while adjusted earnings per share increased 13.3% to $2.47.

IQVIA highlighted that Research & Development Solutions services bookings of over $1.9 billion in Q1 marked the largest ever quarter of service bookings. Overall, contracted backlog exceeded $25 billion for the first time and was up 9% year-over-year, with more than $7 billion expected to be converted to revenue over the next 12 months.

J.P. Morgan analyst Anne Samuel believes that IQVIA is an “attractive core holding” in the current environment based on its “consistent profitable growth” and 6% free cash flow yield.

Samuel pointed to the company’s massive addressable market at $285 billion, and an attractive financial profile based on its low double-digit revenue and EBITDA growth, with significant free cash flow generation.

Samuel has a Buy rating on IQVIA stock with a price target of $255.

Overall, IQVIA scores the Street’s Strong Buy consensus rating based on 12 Buys and one Hold. The average IQVIA price target of $257.62 implies 21.40% upside potential from current levels.

Conclusion

Wall Street analysts estimate a higher upside potential in IQVIA and Biogen stocks compared to Gilead. Analysts’ consensus rating is highly bullish on IQVIA, while the view for Biogen is cautiously optimistic. IQVIA seems to be a better pick currently.

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