Top Biopharma Stocks to Buy as Market Sinks
I'm increasing my stakes in two biopharma stocks as the market continues to move south.
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Stocks got off to a good start last week with the NASDAQ rising more than 2% on Monday to commence the new trading week on solid footing.
Unfortunately, the initial enthusiasm to the week proved to be little more than a short-lived rebound. Thanks primarily to a sharp selloff on Friday, the tech-heavy index ended down nearly 2.6% on the week. The S&P 500 fell just over 1.5%, its fifth losing week of the last six. Increasing concerns about "sticky" inflation and new tariffs were the primary drivers of the decline.
Equities came into this recent pullback in significantly overbought territory based on various historical valuation metrics. Even with the S&P 500 nearing official "correction" territory, stocks are hardly oversold. That said, I continue to put some of my considerable dry powder to work on big down days like Friday via covered-call orders. I expect that to remain my game plan throughout the second quarter and I don’t believe the market is near any sort of inflection point or significant buying opportunity.
In today’s column, I will highlight a couple of biopharma names I added to as markets came to the end of another down week on a sour note.
Let’s start with Legend Biotech Corporation LEGN. The stock is down nearly 40% from its highs last summer. However, the shares do seem like they are trying to put in a bottom near current trading levels here in 2025.
Its CAR-T therapy Carvykti partnered with Janssen, the biotech arm of Johnson & Johnson JNJ and approved in 2022 to treat certain kinds of multiple myeloma is off to a good start. The company easily beat both top- and bottom-line expectations when it reported fourth quarter results earlier this month as revenues rose just under 135% on a year-over-year basis.
The company is working to expand Carvykti to other indications and believes it has eventual $5 billion peak sales potential. The company also has additional cell therapy candidates in development and signed a licensing deal with drug giant Novartis NVS last year. Analyst firms like Morgan Stanley, Barclays and Citigroup are very enthusiastic about the company’s prospects and the median analyst price target is more than twice the current trading level of the stock. Legend has a market cap of just over $6 billion and ended FY2024 with approximately $1.1 billion in cash and marketable securities on its balance sheet. The company consistently makes potential mid-cap biotech buyout lists as well.
I have highlighted Harrow, Inc. HROW a few times on these pages over the past couple of months. This ocular-focused biopharma concern reported Q4 numbers on Friday before the bell. Results were beyond solid as earnings per share came in at 40 cents a share, triple the consensus. Revenues rose 84% on a year-over-year basis to $66.8 million, besting expectations by some $5 million. The shares were up early in trading on Friday following these results but eventually sold off due to the dismal market on Friday to end the day down some 6% despite fantastic results. I added more HROW to my personal accounts via covered-call orders on just before the market close on Friday as the market threw out the baby with the bath water as equities tumbled to end another challenging trading week.
At the time of publication, Jensen was long HROW and LEGN.
