Biotech could be on the verge of a major comeback in 2024. The main reason for this expected turnaround is the high likelihood that the Federal Reserve will start to cut interest rates this year, and continue this trend out till 2026. Lower interest rates would benefit the industry immensely because of the capital-intensive nature of product development in the space.
Another driving force is the surge of innovation in the industry. In 2023, the Food and Drug Administration approved several important new therapies for hard-to-treat indications such as Alzheimer's, obesity, and sickle cell disease. Taken together, these two tailwinds ought to help the industry recover from its two-year slump.
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Based on this outlook, I believe the following biotech stocks are worth a look right now. Here is the list, along with my main rationale for choosing each stock.
These five biotechs could shine in 2024
1. Amgen (AMGN 0.22%) makes this list thanks to its weight-loss candidate, maridebart cafraglutide, a.k.a. MariTide. It's in phase 2 testing with top-line data due out in Q4. If positive, Amgen's shares should rally because of the drug's multibillion-dollar peak sales estimate. Meanwhile, investors can collect the biotech's sizable dividend, which pays an annualized yield of 2.94% at current levels.
2. Argenx SE (ARGX 1.14%) is a Netherlands-based biotech company focused on the development of treatments for autoimmune disorders. The biotech scans as a strong buy because of the rapid commercial uptake of its flagship drug Vyvgart Hytrulo in patients with myasthenia gravis, a rare condition that leads to pronounced muscle weakness. Argenx has designs on expanding the drug's label to include another rare condition called chronic inflammatory demyelinating polyneuropathy later this year, and it is trialing the drug in several additional high-value indications.
3. BeiGene (BGNE 3.38%) is an oncology company that screens as deeply undervalued. The company sports one of the most robust clinical pipelines for both solid and liquid tumors in the industry, giving it plenty of firepower to create value for shareholders. Wall Street thinks BeiGene's shares could appreciate by 63.5% over the next 12 months. Based on the parade of upcoming pipeline readouts and the stellar commercial prospects of its approved products, I think this price target isn't unrealistic by any means.
4. CRISPR Therapeutics (CRSP 0.34%) grabbed an important first-mover advantage in the CRISPR/Cas9 gene editing realm with the FDA approval of Casgevy for sickle cell disease last year. While I don't expect this stock to take off like a rocket in 2024, I do think it is time to start accumulating shares of this groundbreaking company. Over the next 10 years, CRISPR's shares are highly likely to produce returns far in excess of the broader markets, thanks to the unique nature of its gene-based medicines and robust pipeline that's targeting multiple high-value indications.
5. Immunovant (IMVT -2.09%) is another autoimmune disease play. The company stands out largely because of its early stage candidate IMVT-1402. IMVT-1402 might turn out to be a best-in-class therapy in terms of both efficacy and safety in some disease settings, a fact that's likely to attract a fair amount of interest from potential acquirers. I expect this stock to steadily inch higher as additional data becomes available. That said, this is a high-risk play because of the competitive landscape and the drug's early stage nature.
