Last year was a banger for growth stocks. The Nasdaq Composite index soared 43% in 2023.
The "Magnificent Seven" were a big part of last year's growth stock rally, but they aren't the only businesses that can put up big gains. Everyday investors looking for stocks that can make dramatic moves in 2024 can find what they want from smaller businesses in the healthcare sector.
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At the moment, Wall Street investment bank analysts have big expectations for some high-profile biotech stocks. Consensus price targets suggest these three can rise 44% to 210% over the next 12 months or so.
Ginkgo Bioworks
Ginkgo Bioworks (DNA 0.93%) manages a cell programming foundry for third parties who want a custom-built microorganism. For example, the U.S. Department of Energy recently hired Ginkgo to help develop new strains of algae that capture atmospheric carbon dioxide and turn it into biofuels and other products.
NYSE: DNA
Key Data Points
Ginkgo Bioworks also has a biosecurity segment that screens for infectious diseases. Third-quarter biosecurity revenue tanked because of less COVID-19 testing in schools, but this isn't the end of this segment. The company has partnered with the U.S. Centers for Disease Control (CDC) to develop an air travel-based pathogen monitoring program that could become a large and reliable revenue source.
Ginkgo reported third-quarter cell engineering revenue that jumped 52% higher year over year to $36 million. Its foundry added 21 new cell programs in the third quarter. With expectations that some of these new compounds can become successful commercial products, the average Wall Street analyst following Ginkgo thinks its stock price can rise 210% over the next year or so.
Iovance Biotherapeutics
Iovance Biotherapeutics (IOVA 1.28%) is a clinical-stage biotech that could cross over to the commercial stage soon. An application regarding its experimental cancer treatment, lifileucel, is under review by the U.S. Food and Drug Administration (FDA). The agency is expected to announce an approval decision on or before Feb. 24.
NASDAQ: IOVA
Key Data Points
Wall Street analysts optimistic about Iovance and lifileucel have a consensus price target of $21.10 on the stock right now. That suggests it can rocket 149% higher in 2024.
Wall Street is bullish for Iovance because its lead candidate could become a new option for underserved skin cancer patients who don't respond well to today's standard treatments. In studies underpinning the application in front of the FDA, many advanced-stage melanoma patients with tumors that grew despite treatment with Keytruda and related drugs responded to lifileucel. Moreover, those tumor responses appear durable.
Good stocks to buy now?
Before buying any stocks with expectations that they'll reach lofty price targets, everyday investors need to realize that the sell-side analysts who set such targets are often wrong. When things don't work out, they can simply adjust their targets downward, but this won't help you recover any losses.
Ginkgo Bioworks could begin realizing heaps of downstream revenue if its clients start making money from the custom-built organisms it designs. Investors should know that after 15 years in business, Ginkgo still isn't reporting significant downstream revenue, and it lost $681 million in the first nine months of 2023. It's best to keep Ginkgo on a watchlist until it starts making ends meet.
Clinical trial data from Iovance suggests lifileucel will receive a green light but investors should know that the application has been delayed a long time already. If it does earn approval, its initial launch could be unpredictable.
Lifileucel isn't an easy-to-swallow tablet. It's an infusion of genetically modified immune cells manufactured in batches of one using cells harvested from patients themselves. The uptake of complicated cellular cancer therapies is slowly improving, but it's hard to imagine lifileucel sales exceeding $1 billion annually in the next five years.
Iovance's recent market cap of $2.1 billion has a lot of success for lifileucel already baked into the price. If the company can't pull off a successful launch for any reason, the stock could fall hard. Eventual expansion of lifileucel to treat lung cancer could eventually make Iovance a huge winner for your portfolio. For now, this stock is appropriate only for investors who can handle the risks.
