Please ensure Javascript is enabled for purposes of website accessibility

3 Winning Stocks Warn of Biotech Bubble

By Dave Williamson - Feb 12, 2014 at 8:27PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Health care's three best stocks raise concerns that a biotech bubble is officially here.

In this video from Wednesday's edition of Market Checkup, Motley Fool health-care analyst David Williamson takes investors through the biggest winners of the day in the biotech space.

Seattle Genetics (SGEN 0.16%) is first up on the list, coming in as a winner today after reporting $67 million in revenue, which was $8 million above estimates, with its earnings loss at only $0.13 per share, rather than the expected $0.24. David has some concerns about the company for 2014, however. With only $160 million in projected sales of its approved drug Adcetris and an additional $60 million in licensing revenue, the company may find its future in its pipeline, David says, not in its currently approved drug.

Flexion is the next winner on the list, with shares up nearly 15% on its IPO. The company has a phase 2 injectable sustained-release intra-articular steroid treatment for patients with moderate to severe osteoarthritic pain in its pipeline, which is a breath of fresh air after a multitude of companies that have IPO'd recently with little more than concepts and ideas.

And finally, Eagle Pharmaceuticals IPO'd as well today, though shares aren't seeing the same pop that Flexion saw. The company managed to raise $50 million, giving it a market cap of more than $200 million, but after finding that the company hasn't even managed to develop a website for itself yet, David makes the call that biotech enthusiasm has become detached from the true value of these companies, and that a new biotech bubble is here.

David Williamson has no position in any stocks mentioned. The Motley Fool recommends Seattle Genetics. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Seagen Inc. Stock Quote
Seagen Inc.
SGEN
$170.79 (0.16%) $0.27

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
402%
 
S&P 500 Returns
129%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.