Investors have been selling off their stakes in biotech stocks in fear that payer pushback on drug prices may curb profit and lead to fewer drugs under development. Although those worries are valid, it could be that, when the dust settles, the focus will be on limiting overall healthcare costs, including hospitalization. If so, investors willing to take on risk and bargain hunt for biotech stocks that already have profitable drugs on the market may get rewarded.
In the following slideshow, I highlight three biotech stocks with forward P/E ratios that are significantly lower than what is typical for the industry, and that might be worth considering. Those three companies, AMAG Pharmaceuticals (AMAG), Mallinckrodt Plc (MNK), and Gilead Sciences (GILD 0.07%), have all been on the hot seat in the past. Each has risks that must be weighed; but given their low valuations, each may be worth a closer look by investors.
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