Wall Street analysts don't always get it right. It's important to acknowledge this right off the bat. However, they're paid the big bucks to pore over every detail they can find about a given company to come up with an educated guess about how its stock will perform.
Sometimes, analysts come away unimpressed. Other times, they're optimistic about a stock's potential. And in a few cases, they're absolutely giddy about the potential gains that a stock might deliver. That last category is especially worth watching. Here are three stocks that Wall Street thinks will soar 50% or more in 2021.
The average analyst price target for Amarin (AMRN -4.09%) reflects a premium of 58% over the current price of the biotech stock. Some on Wall Street think that Amarin has nowhere to go but up after plunging 77% last year.
The bullishness might seem somewhat surprising. The company lost an enormously important lawsuit in September. The U.S. Court of Appeals for the Federal Circuit upheld a decision by a U.S. District Court in favor of two companies seeking to make generic versions of Amarin's Vascepa.
So what could analysts be thinking? For one thing, they know that Amarin isn't simply throwing in the towel. The company sued Hikma Pharmaceuticals for patent infringement in November after the U.K.-based drugmaker launched a generic version of Vascepa. Should Amarin win this litigation, it could change the company's outlook significantly.
In addition, Wall Street gurus know that Amarin still has a clear path for now to market Vascepa outside the U.S. without generic competition. Also, the anticipated easing of the COVID-19 pandemic could enable the company to promote the drug even more, boosting sales.
2. bluebird bio
Analysts think even more highly of the prospects for bluebird bio (BLUE 11.52%). The average price target for the stock is a whopping 71% above its current level. Like Amarin, though, Bluebird has a lot of ground to make up. Its shares sank 50% in 2020.
There are three main reasons behind Bluebird's falling stock. First, the U.S. Food and Drug Administration (FDA) gave a thumbs-down to multiple myeloma candidate ide-cel. Second, Bluebird issued more shares to raise cash, diluting the value of existing shares. Third, the biotech delayed its FDA filing for approval of LentiGlobin in treating sickle cell disease by at least a year to address manufacturing issues.
However, Wall Street analysts probably see these as only temporary challenges. Bluebird's partner, Bristol Myers Squibb (BMY 1.46%), resubmitted for FDA approval of ide-cel in July 2020 and expects an approval decision in March of this year. Bluebird is also making progress with its LentiGlobin program.
The biotech's decision to spin off its oncology business into a separate unit caused some head-scratching among analysts, but Bluebird thinks the move will provide a much-needed catalyst.
3. Nektar Therapeutics
You might notice a trend here. Our third stock that Wall Street analysts really like is also a biotech stock. The average price target for Nektar Therapeutics (NKTR 7.14%) reflects a premium of more than 80% above its current price. As was the case with Amarin and Bluebird, Nektar's shares fell last year, although its 21% slide wasn't as bad as the other two stocks' declines.
It's not hard to figure out why analysts expect brighter days ahead for Nektar. The company and partner Bristol Myers Squibb have five different pivotal late-stage studies underway for a combination of bempegaldesleukin and Opdivo targeting multiple types of cancer.
Nektar also has another big partner. It's working with Eli Lilly to conduct phase 2 clinical studies evaluating NKTR-358 in treating lupus and ulcerative colitis. The companies are also evaluating the experimental drug in early stage studies targeting atopic dermatitis and psoriasis.
Can Nektar really soar 80% or more over the next 12 months? That remains to be seen. However, it wasn't all that long ago (July 2019) that the stock traded higher than the current average analyst price target. Good news from its pipeline just might enable Nektar to make a huge comeback.