Investors looking for stocks that could put up huge gains in relatively small amounts of time ought to turn their attention to the healthcare sector. Analysts on Wall Street are pointing to a few stocks there that they predict could rocket 98% to 108% higher over the next 12 months.
Before you get too excited about those lofty price targets, though, it's important to remember that analysts can easily adjust them downward if their predictions don't play out as hoped. And you more than likely value your own portfolio's performance more than sell-side analysts value their reputations. So let's look at the reasons they expect these two stocks to climb before risking any hard-earned money on them.
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CRISPR Therapeutics
CRISPR Therapeutics (CRSP +3.46%) is a popular gene-editing stock for reasons beyond its highly descriptive company name. Its lead treatment candidate, exa-cel, is a CRISPR-based treatment for sickle cell disease and beta-thalassemia.
NASDAQ: CRSP
Key Data Points
Currently, exa-cel is under review by the Food and Drug Administration. If it's approved, CRISPR Therapeutics and its collaboration partner Vertex Pharmaceuticals -- a company that's already adept in marketing rare disease drugs -- could launch it early next year. Sales of exa-cel are expected to top out above $1 billion annually.
In addition to exa-cel, CRISPR Therapeutics is enrolling patients into clinical trials for two experimental cancer treatments. It's also enrolling patients in a trial of VCTX211, an experimental treatment that could help type 1 diabetes patients begin producing their own insulin again.
Based on their high hopes for exa-cel and the rest of CRISPR Therapeutics' pipeline, the average analyst following the stock thinks it can rise by about 108% over the next 12 months.
While it's easy to see why Wall Street is bullish for this drugmaker, everyday investors need to remember that it's still a clinical-stage company with no products on the market. Its market cap -- recently in the neighborhood of $3.3 billion -- could soar over the long run, but only if exa-cel succeeds, as well as at least some of the candidates further back in its pipeline.
If exa-cel's approval is delayed or if its early sales figures disappoint, shares of CRISPR Therapeutics could fall hard. While this stock could provide market-beating gains, it's only appropriate for investors with a huge tolerance for risk.
Hims and Hers Health
Hims & Hers Health (HIMS +0.99%) operates a telehealth platform with a focus on several underserved niches. The average price target on its stock suggests it can rise by about 98% over the next 12 months.
NYSE: HIMS
Key Data Points
Hims & Hers Health has a growing member base that pays subscription fees for help accessing prescription and non-prescription treatments for conditions related to sexual health, hair loss, dermatology, and mental health.
High demand for access to drugs that generally aren't sold over the counter, such as birth control, antidepressants, and erectile dysfunction treatments, is attracting heaps of new members to the company's roster. At the end of June, it had 1.3 million subscribers, which was 74% more than it had a year earlier.
Management expects new members to drive annual revenue up by more than 60% in 2023 to a range between $830 million and $850 million.
The company is still reporting net losses on a GAAP (generally accepted accounting principles) basis, but cash from operations rose to $26.3 million during the first half of 2023. At recent prices, you could buy the stock for a very reasonable valuation of 37.7 times forward earnings. The stock could fall sharply if the bottom line doesn't keep trending upward, but that looks like a risk most growth stock investors won't mind taking.
