Thursday, 18 April 2024

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Which Biotech Stock Offers the Most Upside? – TipRanks Financial Blog

Which Biotech Stock Offers the Most Upside? – TipRanks Financial Blog

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The biotechnology scene is becoming difficult to ignore if you consider yourself a growth investor who seeks upside potential beyond just the numerous crowded artificial intelligence (AI) plays. Though there are still lower-cost AI stocks in the mega-cap universe, I’d argue that few are capable of the type of upside as some of the market’s most innovative biotechnology firms — like LLY, REGN, and BHVN.

Further, the biotechnology scene stands out as one of the industries that can also be made more efficient by the rise of AI technologies. Indeed, biotechnology investing can be rather speculative, given uncertainties involving clinical trials and how much “promise” is really in a firm’s development pipeline. Add a bit of the magic offered by AI tools, though, and I think the whole process of biotechnology innovation could be changed for the better.

In this piece, we’ll use TipRanks’ Comparison Tool to check out three fast-running biotechs that have what it takes to extend their gains many years into the future.

Eli Lilly’s parabolic surge has been many years in the making, with the name now up more than 116% in the past year alone on the back of weight-loss drug (GLP-1) hype. Though Ozempic and Wegovy may have received most of the praise, we can’t count out the growth prospects of Eli Lilly’s Mounjaro and Zepbound. Arguably, Eli Lilly’s offering may be perceived as better, given that it’s been more effective at lowering A1C (in other words, reducing average blood sugar levels) and producing larger drops in weight.

In any case, only time will tell which GLP-1 drug reigns supreme. For now, it’s hard not to be bullish on Eli Lilly as it looks to combat obesity with future innovations. And let’s not forget that GLP-1 drugs may have benefits beyond just weight loss. However, we’ll have to wait for how the clinical trials pan out.

Though I view Eli Lilly as the number-one GLP-1 stock, I’m a tad uncomfortable with the valuation. Shares trade at 131.6 times trailing price-to-earnings (P/E) after more than doubling in the past year. Like the AI boom, though, perhaps the obesity drug frenzy could exceed past even the wildest analyst expectations on Wall Street, which could make Eli Lilly’s premium worth paying. Personally, I think a small partial position in the name can’t hurt if you’re keen on investing in GLP-1 drugs.

What Is the Price Target of LLY Stock?

LLY stock is a Strong Buy,…

Click Here to Read the Full Original Article at TipRanks Financial Blog…


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