While unpredictable compared to other sectors due to the ebb and flow of clinical trials, the best biotech stocks to buy offer investors incredible upside opportunities. Better yet, the volatility largely centers on developments of the industry itself rather than the broader economy. By that, I mean biotechnology firms may enjoy some economic insulation as their relevance supersedes variables like interest rate dynamics.
Still, it doesn’t mean that the best biotech stocks to buy are immune from broader economic pressures. As well, with mass layoffs collectively impacting what white-collar workers can spend on their portfolios, investors should exercise careful judgment.
For that, I’ve compiled some of the most compelling ideas in the biotech space. Each of these ideas feature a minimum consensus rating of moderate buy or its equivalent. As well, they’re undervalued relative to trailing earnings. So, if you’re ready, these are the best biotech stocks to buy for Feb. 2023.
Regeneron (NASDAQ:REGN) frequently pops up on Gurufocus.com’s radar for compelling and undervalued biotech plays. Headquartered in Westchester County, New York, Regeneron invents, develops, and commercializes life-transforming medicines for people with serious diseases. It’s also a strong performer. In the trailing year, REGN gained over 25% of equity value.
Primarily, retail investors consider Regeneron as one of the best biotech stocks to buy for its value proposition. Currently, the market prices REGN at a forward multiple of 18.79. As a discount to forward earnings, Regeneron ranks better than 66.13% of the competition. As well, the company enjoys excellent sales growth (47.3% over the past three years) and profitability (39.17% net margin).
Not surprisingly, Wall Street analysts peg REGN as a consensus moderate buy. Further, their average price target stands at $834.94, implying upside potential of 6.94%. Finally, hedge funds love REGN, with TipRanks rating sentiment among these institutional investors as very positive. Therefore, REGN is one of the best biotech stocks to buy.
Vertex Pharmaceuticals (VRTX)
Based in Boston, Massachusetts, Vertex Pharmaceuticals (NASDAQ:VRTX) claims it invests in scientific innovation to create transformative medicines for people with serious diseases. Like Regeneron above, Vertex represents a strong performer. In the year so far, VRTX gained almost 7% of equity value. During the trailing year, VRTX soared over 25%.
As well, retail investors appreciate the value proposition that Vertex brings to the table. Presently, the market prices VRTX at a forward multiple of 19.12. As a discount to forward earnings, Vertex ranks better than 64.52% of sector rivals. In addition, the company enjoys a strong sales growth rate (35.3% in the past three years) and profitability (37.62% net margin).
Also, it’s worth noting that Vertex enjoys a stout balance sheet. Specifically, its Altman Z-Score pings at 15.11, reflecting extremely low bankruptcy risk. Finally, Wall Street analysts peg VRTX as a consensus moderate buy. Their average price target stands at $333.73, implying upside potential of 9.47%. Therefore, it makes a compelling case for best biotech stocks to buy this month.
Harmony Biosciences (HRMY)
A relatively lesser-known enterprise, Harmony Biosciences (NASDAQ:HRMY) nevertheless deserves consideration for best biotech stocks to buy. According to its website, the company specializes in developing and delivering new treatments to help people living with rare neurological diseases. As with the top two names, HRMY represents a strong performer in the charts. In the trailing year, shares gained over 30% of equity value.
That said, since the Jan. opener, HRMY slipped more than 6%. However, this stumbling could inspire contrarians to jump onboard. Currently, the market prices HRMY at a trailing multiple of 19.36. As a discount to earnings, Harmony ranks better than 65% of its peers. Also, HRMY trades at 19.4-times operating cash flow. As a discount to the underlying metric, Harmony ranks superior to 62.5% of its peers.
Notably, Harmony enjoys a decently stable balance sheet. In addition, it’s highly profitable with a net margin of 38.84%. Wall Street analysts really dig HRMY, pegging it a consensus strong buy. Also, their average price target stands at $68.25, implying nearly 38% upside potential. Easily, Harmony ranks among the best biotech stocks to buy in February.
Stepping toward the higher-risk names among the best biotech stocks to buy, we come to France’s Genfit (NASDAQ:GNFT). A late-stage biopharmaceutical company dedicated to the discovery and development of innovative therapeutic and diagnostic solutions in metabolic and liver-related diseases, Genfit aims to serve considerable unmet medical needs. Despite the clinical risks associated with this subsegment, GNFT is a respectable performer, gaining 13.5% in the trailing year.
Currently, the market prices GNFT at a trailing multiple of 4.68. As a discount to earnings, Genfit ranks better than 89.16% of its peers. Further, GNFT trades at 2.83-times sales, which is very undervalued relative to the industry median. However, Gurufocus.com warns that Genfit may be a possible value trap.
It’s a tough call because its incredible growth rate (nearly 800% in the past three years) won’t last. As such, there might be questions about its profitability metrics. However, H.C. Wainwright analyst Ed Arce is willing to support Genfit, pegging GNFT as a buy. As well, Arce anticipates shares will rise to $8 a pop. That would imply upside potential of over 79%, making GNFT one of the best biotech stocks to buy.
iTeos Therapeutics (ITOS)
A cancer-fighting specialist, iTeos Therapeutics (NASDAQ:ITOS) is pioneering the discovery and development of highly differentiated Immuno-oncology therapeutics for patients. Representing one of the riskier names among the best biotech stocks to buy, prospective investors must be careful. True, ITOS gained nearly 10% since the Jan. opener, a respectable performance. However, in the trailing year, shares collapsed to the tune of about 44%.
Now, despite that obvious challenge, ITOS may still command contrarian interest. Presently, the market prices shares at a trailing multiple of 2.96. Under the context of a running discount against earnings, iTeos ranks better than 93.36% of the competition. Further, the market prices ITOS at 1.71-times sales, comparing favorably to the sector median of 10.61 times.
At the moment, iTeos enjoys a robust balance sheet (with a cash-to-debt ratio of over 167 times) and strong profitability (with net margin of 57.48%). Finally, Wall Street analysts peg ITOS as a consensus moderate buy. Further, their average price target stands at $54, implying 165% upside potential. If it gets there, ITOS would easily represent one of the best biotech stocks to buy.
Selecta Biosciences (SELB)
Another risky but simultaneously compelling name among the best biotech stocks to buy, Selecta Biosciences (NASDAQ:SELB) aims to restore natural immune system balance by re-imagining immunotherapy for autoimmune disease. Ultimately, it hopes to unlock the potential of gene therapy and amplify the efficacy of biologic therapy.
Despite its scientific potential, SELB rates as a volatile investment. In the trailing year, shares slipped nearly 20%. However, since the January opener, SELB gained over 59% of equity value, making it an intriguing prospect for gamblers.
In terms of the financials, the market prices SELB at a trailing multiple of 15.25. Stated as a discount to earnings, Selecta ranks above 70.98% of sector peers. As well, SELB trades at 1.96-times sales, which as a discount ranks better than 88.13% of the industry.
Interestingly, despite the sharp risks involved with Selecta, Wall Street analysts peg SELB as a consensus strong buy. Even better, their average price target of $6.80 implies upside potential of almost 272%.
Perhaps the riskiest name on this list of biotech stocks to buy, Chimerix (NASDAQ:CMRX) belongs to the gamblers. If you want something a bit more reliable, the top names should take priority. However, Chimerix delivers potentially blistering upside potential. Specializing in a new class of cancer therapies, CMRX may skyrocket depending on clinical trial results.
So far, circumstances don’t bode well. In the trailing year, CMRX fell almost 69%, a staggering loss. At the same time, since late September last year, CMRX stabilized. Currently, the market prices shares at a trailing multiple of 1.05. As a discount to earnings, Chimerix ranks better than 97.2% of the competition. Still, as Gurufocus.com warns, CMRX may be a possible value trap.
Admittedly, it’s going to be difficult to hold Chimerix shares, not really knowing where the wind might blow. Still, Wall Street analysts remain confident, pegging CMRX as a consensus moderate buy. Also, their average price target stands at $8, implying upside potential of over 337%. If so, CMRX would easily rank tops among the best biotech stocks to buy this month.
On the date of publication, Josh Enomoto did not have (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.