Oppenheimer, Wedbush say buy these biotech stocks for 2024

Heading into 2024, Wedbush thinks the biotech sector is overdue for a return to positive growth. Particularly within the small-to-mid-cap complex, the firm sees companies with clinical data past key de-risking points and holding strong balance sheets as likely to be the most attractive. Among Wedbush’s top picks for 2024 are Ascendis Pharma (ASND), Neurocrine Biosciences (NBIX) and Sarepta Therapeutics (SRPT). Also previewing the year ahead, Oppenheimer presented its top ideas for 2024 for the sector. The list includes names like Amgen (AMGN), Gilead (GILD) and Vertex Pharmaceuticals (VKTX).

WEDBUSH’S BIOTECH TOP PICKS: Wedbush believes the biotech sector is overdue for a return to positive growth. Particularly within the SMID-cap complex, the firm sees companies with clinical data past key de-risking points and holding strong balance sheets as likely to be most attractive. Wedbush thinks sentiment towards the space reached a nadir in October and with additional pipeline successes, the sector can work higher over the course of the year. Among the top picks for 2024, the firm includes Outperform-rated Alpine Immune (ALPN), Apogee Therapeutics (APGE), Ascendis Pharma, Edgewise Therapeutics (EWTX), Fusion Pharmaceuticals (FUSN), Geron Corp (GERN), Ideaya Biosciences (IDYA), MoonLake Immunotherapeutics (MLTX), Neurocrine Biosciences, Sarepta Therapeutics, Scholar Rock (SRRK), United Therapeutics (UTHR), and Viridian Therapeutics (VRDN).

While 2023 brought many challenges to biotech investors, steep valuations were not one of them, Wedbush notes. The firm also acknowledges that the theme of consolidation in the public biotech space represents a dynamic it monitored closely in 2023. Capital markets remain open for biotechs and Wedbush continues to assume this will remain the case in 2024. Thus, it thinks further consolidation in the public markets might be limited in 2024, particularly if the IPO market reopens.

OPPENHEIMER TOP PICKS: In its own research note previewing the year ahead for Oppenheimer’s Biotechnology coverage, the firm notes that the sector has seen a bifurcation between “haves” and “have nots” over recent years — especially with respect to the funding cycle, with data continuing to rule the day. Positive clinical results and take-outs, even “take-unders,” have been the success stories in 2023, and Oppenheimer sees that trend persisting. Next year, the political climate may be a more important deciding variable for the sector, the firm added.

As an outsized proportion of the sector, some moderation of the subsector’s underperformance could go a long way. The firm emphasizes the ongoing M&A interest in ADCs, rising enthusiasm for radiopharmaceuticals, and underappreciated targeted approaches. Oppenheimer also stays intrigued by the potential for cell therapy approaches in autoimmune diseases, with added scrutiny on risk-benefit. The firm’s top ideas are Alpine Immune, Amgen, Crinetics Pharmaceuticals (CRNX), Cytokinetics (CYTK), Dyne Therapeutics (DYN), Fusion Pharmaceuticals, Gilead, Soleno Therapeutics (SLNO), Savara (SVRA) and Vertex Pharmaceuticals.