Top 9 Biotech Stocks Poised for Momentum Gains
Rocket Pharmaceuticals, Mereo BioPharma and these other names have good potential to breakout once the biotechnology sector sees some gains.
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The market is mixed on Wednesday morning as participants await a Fed interest rate decision in the afternoon and some major earnings reports after the close. There is still much uncertainty about the impact of DeepSeek on the AI sector, but the worst fears are dissipating.
Breadth is running about even, but the Magnificent Seven MAGS is lagging, with all seven names in the red. The good news is that there is rotation into the rest of the market, with the Russell 2000 ETF IWM leading with a gain of around 50%.
One group that I am watching very closely is biotechnology. I like biotech because of the potential for very large moves when a stock starts to perform, but this sector has been struggling for years and is still far behind the highs it hit back in 2021. There are some mild signs that the sector has bottomed, but it is far too early to conclude that it will finally find some traction.
Here are updates on nine stocks I hold in the sector that I believe have good potential when the biotechnology sector eventually gains some momentum:
ADMA Biologics ADMA: ADMA has had revenue growth of 78% in each of the last two quarters and become solidly profitable. The stock took a hard hit when its CPA firm resigned, and it hasn’t recovered despite retaining PwC, which is one of the four big CPA firms. The company has consistently beat estimates, but it is a little expensive. I’m expecting strong fourth-quarter earnings to create renewed interest.
BridgeBio BBIO: On January 13, BBIO announced very strong metrics for its Attruby drug, which is used to treat a disease that affects the heart muscles. The stock has moved up very strongly, but the potential here is large, and there are also other drugs in the pipeline. I’m looking to add to my position on pullbacks.
Delcath DCTH: Delcath preannounced strong revenue for the fourth quarter and is growing very fast. It trades thin and is not well known, but the numbers here are very strong, and the valuation looks attractive.
Humacyte HUMA: HUMA has been extremely frustrated. It finally received its Symvess artificial vein after a long delay and is starting initial sales. It has other indications for its technology and will be meeting with the FDA, but the market wants to see how initial sales go before it embraces the stock. There is a risk of a secondary offering, which is also keeping the stock suppressed
Mereo BioPharma MREO: MREO is languishing while it awaits data for its drug that treats brittle bone disease. It is partnered with Ultragenyx Pharmaceuticals RARE, and positive results are highly likely, but it will take a few months. There is also the potential of a partnership on another drug that would move the stock. It looks washed out at this point, but it may stay suppressed for a while.
uniQure QURE: QURE met with the FDA in December 2024 and indicated that there is a high likelihood of approval of its AMT-130 program for the treatment of Huntington’s disease. No further studies are needed, so it is just a matter of time before we see a filing with the FDA to seek approval. The stock has been trading in a high-level base and pulled back on a secondary offering but it is holding up well.
Rocket Pharmaceuticals RCKT: RCKT is a gene therapy stock that has been struggling despite a strong pipeline of potential catalysts. For some reason, the gene therapy group has been out of favor, and the stocks in the group have been punished badly. Analysts love the stock, and it has the potential to make a big move on any positive development. It remains one of my top picks for 2025.
Viking Therapeutics VKTX: Viking has developed an obesity drug that can be taken orally or by injections. It has some of the best data with the fewest side effects, but investors have been disappointed that no major firm has taken an interest in acquiring it. This is one of the best drugs in the obesity sector, and eventually, that should pay off.
Xeris XERS: Xeris is chugging along nicely with sales of three commercial products. The company is about to start trials for a new drug with a market greater than $1 billion, which should attract attention. This stock is one of the best values in the biotechnology sector and has some tremendous upside kickers that could hit at any time.
I’ll be trading all of these stocks aggressively as I await further developments.
At the time of publication, DePorre was long ADMA, BBIO, DCTH, HUMA, MREO, QURE, RCKT, VKTX and XERS.
