The Best Biotech Stock to Invest In?
The biotechnology sector is simply the main source for innovation of new drugs and treatments. Therefore, it could offer investors opportunities for long-term growth. Looking to 2016, it is difficult, if not impossible, to pick the “best biotech stock to invest in,” or the best biotech stock with higher returns. Still, there is certainly evidence that points toward the more profitable trend.
The fact that there have been many publications in the field of immuno-oncology—that is therapies to treat several types of tumors/cancers—suggests choosing stocks of companies in this field. But another factor to consider is the state of progress of various tests. Investors also have to gain a decent-enough knowledge about new therapies and the effective treatments for a number of diseases, including some for which there is currently no cure. On this basis, innovation in the sector is the key. But risk of failure, given the experimental focus of these companies, is high.
Best Small-Cap Biotech Stock to Watch
Conversely, still acknowledging the risk, you might start focusing on one biotech stock for higher gains, if not the top biotech stock in the U.S. market.
The upside of a biotech company, especially a young one, is always in a kind of “development phase.” This means there is always the possibility of explosive potential. These companies, whose capitalization starts out at a few million dollars, are able to defy the laws of gravity in terms of market action.
Consider that there is always the chance that one biotech could become the Pfizer Inc. (NYSE:PFE), Sanofi SA (NYSE:SNY), or Merck & Co., Inc. (NYSE:MRK) of tomorrow. A top biotech stock in the U.S. market can double or triple earnings in the span of a few weeks or even overnight if a breakthrough wows the market.
But not everyone can be a successful investor and find the one biotech stock for future gains. Being successful means identifying the best biotech stock with the highest returns. It requires a shift in investing attitude. Rather than looking at past performance (the trend in profits, accumulated assets, and balance sheet), you have to evaluate the future potential of the company.
Based on that premise, Aduro Biotech Inc (NASDAQ:ADRO) is an interesting— if not the top—biotech stock in the U.S. market. Aduro stock is trading at less than $15.00 now. Yet a year ago, it debuted on the NASDAQ at $40.00 per share. Aduro Biotech is based in Berkeley, California and it specializes in developing immunotherapies for cancer and other diseases. In other words, it operates in one of the bio-medical fields attracting the most attention (and funding) now.
Last June 10, Aduro shares closed at their lowest point to date, $10.00 per share. Aduro has experienced a gradual recovery since then. Indeed, Aduro could be in for an earnings surprise. (Source: “Will an Earnings Beat be in Store for Aduro BioTech Inc (NASDAQ:ADRO) This Quarter?” Engelwood Daily, last accessed August 24, 2016.)
For the last quarter, Aduro Biotech beat analysts’ estimates by 160%. It reported three cents a share in earnings, which beat the Zacks consensus of a five-cents-per-share loss. Now, the analyst consensus target for Aduro stock is $17.25, but more than one analyst sees it going to $22.00 per share. Indeed, Canaccord Genuity Group Inc, in a research note dated August 5, set a target price of $30.00.
Aduro Biotech’s revenue rose 306.3% year-over-year and analysts expect Aduro to post earnings of $1.23 per share for 2016. Aduro is still working on the discovery and development phase of immunotherapies for cancer and other diseases, but it is at a stage where some could reach the commercialization of a pipeline of such therapies. This is what makes Aduro such a top biotech stock in the U.S. market. It claims to have the potential to transform the treatment of challenging diseases. (Source: “Aduro Biotech Inc. (ADRO) Earns Buy Rating from Canaccord Genuity,” Community Financial News, August 5, 2016.)
The Next Amgen? Maybe
At this stage, clinical trials are the key indicator of performance for a biotech company. One of its most advanced sessions involves “Nivolumab.” This is a treatment now under evaluation in the “Phase 2 STELLAR” trial in patients with metastatic pancreatic cancer. (Source: Ibid.) Note that, as it happens so often in the biotech sector, clinical trials fail. This happened for a pancreas cancer study involving Aduro last May.
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