With the stock market struggling since the beginning of the year, many investors are looking to recoup their losses. One way of doing so is by patiently waiting for shares of great companies to bounce back. Another way is to look for stocks that have the potential to rise substantially within the next year or so.
Of course, that's not easy to find, but we can turn to Wall Street analysts for inspiration. Let's look at two stocks that boast significant upside potential, going by average price targets set by analysts on the street: Moderna (MRNA 1.96%) and CRISPR Therapeutics (CRSP 2.93%).
Biotech giant Moderna fell along with the broader market in recent months. Perhaps investors worry about the company's post-pandemic prospects. Moderna currently generates revenue from just one product: its coronavirus vaccine. The company's sales might fall off a cliff once the pandemic is officially in the rearview mirror. Another possible explanation for Moderna's recent struggle is the company's valuation.
Last year, Moderna's market cap exceeded the $180 billion mark -- quite a feat for a biotech that has managed only one regulatory approval since it was created back in 2010. Whatever the reasons are, Moderna's shares are now substantially cheaper than they were just six months ago. And the company's average price target -- according to Yahoo! Finance -- currently sits at $227.63, representing a potential upside of 75.2% over its current share price of $129.92.
Can the company meet Wall Street's expectations in the next 12 months? In my view, the answer is a definite "no." For one, the fight against the pandemic has progressed, and the market's fears over the company's sales decreasing post-pandemic are warranted. At least some of Moderna's pandemic-related success -- even beyond this year -- was already baked into its stock price before the recent sell-off.
Unless this pandemic serves us with yet another serious curveball, Moderna's shares are unlikely to rise by 75% in the next year. But that doesn't mean it isn't worth investing in Moderna.
Thanks to its pandemic-related contributions, the company has generated billions in revenue and profit, and it will continue to do so for at least well into 2023. That should help the vaccine maker advance promising pipeline programs and perhaps acquire exciting new ones from other biotechs. Moderna's revenue came in at $6.1 billion in the first quarter, substantially higher than the $1.9 billion in revenue reported in the first quarter of 2021.
Moderna's net earnings per share of $8.58 more than tripled compared to the year-ago period. The company ended the quarter with $19.3 billion in cash and cash equivalent.
The company is running many clinical trials, including various COVID-19 vaccine candidates that target specific highly contagious variants. The company recently kicked off a clinical trial for a pair of potential flu vaccines, mRNA-1020 and mRNA-1030. Clinical updates should be coming in within the next year for the company. And in the next five years, Moderna should score major regulatory wins.
While the biotech may struggle in the near term, long-term investors should hang tight.
2. CRISPR Therapeutics
Gene-editing specialist CRISPR Therapeutics fell out of style as investors took their money out of speculative growth stocks. The company currently does not have any products on the market, and it generates revenue only thanks to collaboration agreements. But there are good reasons to be optimistic about the company's future -- and Wall Street certainly has high hopes for the biotech. The company's current average price target of $132.18 represents a potential upside of $183.7%.
The biotech industry may be volatile, but even so, it will be difficult for CRISPR Therapeutics to meet this target in the next year. However, it is worth pointing out that the company is looking at a major catalyst coming up ahead. CRISPR's leading pipeline candidate is CTX001, a potential therapy for transfusion-dependent beta-thalassemia (TDT) and sickle cell disease (SCD); both are rare blood-related disorders with very few safe and effective treatment options. CRISPR Therapeutics is developing CTX001 in collaboration with Vertex Pharmaceuticals.
The therapy has already demonstrated encouraging results in a phase 1/2 study, and the two partners plan on submitting regulatory applications for it in both indications in the U.S. and Europe by the end of 2022.
Once CRISPR Therapeutics and Vertex Pharmaceuticals officially announce regulatory submissions, investors could respond by sending shares of both companies -- especially those of the much-smaller CRISPR Therapeutics -- higher. If approved, CTX001 would rid TDT and SCD patients of major burdens. These patients typically require regular blood transfusions, are frequently hospitalized, and tend to die early.
A one-time curative treatment like CTX001 would be priceless for many of these patients although it would almost certainly come with a hefty price tag. Zynteglo, another gene-editing treatment for TDT that was approved in Europe back in 2019, was priced at 1.58 million euros (Zynteglo has since been pulled out of the European market). CRISPR Therapeutics does have other pipeline programs, including three potential gene-editing cancer treatments called CTX110, CTX120, and CTX130.
The strength of the company's platform lies in the fact that various gene-editing techniques will allow researchers to unlock innovative therapies for previously incurable illnesses. CRISPR does seem a bit risky, considering it still doesn't have any marketed products, and it could run into clinical and regulatory headwinds. But with several promising candidates, including one that might hit the market next year, CRISPR Therapeutics is worth serious consideration.