Two Biotech Stocks to Watch as Sector Bounces Back
Biotech and tech rebound, but a new question emerges for the latter.
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The Nasdaq and biotech fell hard the other week. But both are climbing back this week. Let's look at the two sectors and then a couple stocks I've got on my radar.
First, the Nasdaq. The tech-heavy index recovered approximately three quarters of its 3% losses from the prior week on Monday. A forthcoming resolution to the longest federal government shutdown in U.S. history buoyed the overall market, but the Nasdaq led the advance. On Tuesday, the Dow hit an all-time high by rising more than 550 points and the S&P 500 also ended in the black. The Nasdaq gave back a quarter of one 1% in trading yesterday. Some of this was from due to consolidating big gains from the previous day.
But Michael Burry of "The Big Short" fame, came out with a thesis that Big Tech names like Oracle (ORCL) and Meta Platforms (META) were substantially understating depreciation on their AI investments. This in turn is leading to profits being significantly overstated. The story got some play at CNBC and on other financial media outlets. It is something to monitor to see if this counternarrative to the investment case around the AI Revolution that is powering equities higher, gets any legs.
The biotech sector has staged a notable rebound over the past few trading sessions. The State Street SPDR S&P Biotech ETF (XBI) is up some 7% from its intra-day lows last Friday. Helping this rally has been a spate of better-than-expected Q3 results and guidance from numerous small and mid-cap biotech/biopharma companies.
Now for the stocks. Here's I'll highlight two names that have recently posted notable results. They have been profiled here before, and I hold full covered-call positions within both of these stocks.
ADMA Biologics (ADMA) rose 9% in trading on Tuesday, in what looks like delayed reaction to Q3 results and guidance that came out late last week. The company posted unadjusted earnings that met expectations with revenue growth that easily exceeded the consensus. Management bumped up fiscal 2025 sales guidance by $10 million to $510 million as well. Leadership also sees margin expansion thanks to a recently approved Food and Drug Administration manufacturing process change that should improve yields by 20%. The company projects sales will rise to $1.1 billion by fiscal 2029. And this estimate contains no potential contribution from a key product candidate ADMA Biologics is developing within its pipeline. Even with Tuesday’s rally, the stock should be higher.
Harrow Health (HROW) reported third-quarter results on Monday and rose over 13% in trading on Tuesday. The company delivered year-over-year revenue growth of just over 45% and easily stepped over bottom-line expectations as well. Leadership noted it had also recently signed several leading national payers. Coverage will start in 2026, which should provide a significant boost to sales of its primary product VEVYE in the year ahead. On this news, Cantor Fitzgerald reissued its Buy rating on HROW and raised its price target on the stock from $76 to $94 a share. I expect other analyst firms to boost their price targets as well in the days and weeks ahead on Harrow. Even with yesterday’s rise in the low teens, HROW trades for just under forty bucks a share.
At the time of publication, Jensen was long ADMA, HROW, and XBI
