- UBS on Tuesday initiated coverage on nine biotech companies.
- The analysts noted that they're optimistic about where the biotech sector will be in 2021, after a good 2019 and a promising 2020 so far.
- UBS analysts gave buy ratings to four biotech companies: C4 Therapeutics, Sarepta, Immunovant, and Vertex.
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2021 is shaping up to be a critical year for the biotech industry.
Drugmakers are racing to develop treatments and vaccines that will help combat the coronavirus pandemic.
While that work progresses, biotech companies focused on finding treatments for conditions like Duchenne muscular dystrophy, cystic fibrosis, and Alzheimer's disease are carrying on their work with pivotal data or approvals expected in the next year.
Analysts at UBS noted that they're optimistic about 2021, given how the biotech market performed in 2019 and so far in 2020. With that in mind, UBS analysts on Tuesday initiated coverage on nine biotech companies, four of which received buy ratings. Of those four, UBS anticipates two could soar more than 50%.
4 biotech companies investors should buy, according to UBS
UBS noted that in its initiation, it gravitated toward smaller companies. Here are the four biotech companies UBS initiated at a buy rating.
- Sarepta Therapeutics, a company that's developing and makes treatments for genetic diseases including Duchenne muscular dystrophy. UBS is expecting Sarepta will get key data on its gene therapy in the first quarter of 2021. While the market is pricing in positive data for the gene therapy, UBS argues that it's not pricing in just how good that result might be. UBS thinks Sarepta's stock could jump by 54%.
- C4 Therapeutics, a company developing treatments for cancer by degrading key proteins, is one UBS thinks could jump significantly should it get positive data on its treatment for multiple myeloma. If the company gets that positive data in 2022, the analys said it sees the stock trading at four times what it is right now. UBS thinks C4's stock could jump by 69%.
- Immunovant, one of the companies that's part of the Roivant family, is developing a treatment for autoimmune conditions, including warm autoimmune hemolytic anemia. Should Immunovant get positive data on how its drug works in that condition, it could drive the stock up and mitigate some of the risk for the other conditions Immunovant is exploring. UBS anticipates the stock could jump by 45%.
- Vertex Pharmaceuticals sells multiple treatments for cystic fibrosis. The analysts noted that Vertex's stock is trading down after it stopped a study for the condition alpha-1 antitrypsin deficiency. The analysts also noted that they're betting Vertex's valuation isn't pricing in the treatments it's developing beyond the drugs it already has on the market. That includes a gene editing therapy for sickle cell disease that it's developing with CRISPR Therapeutics. UBS thinks the stock could rise 36%.
UBS initiated coverage of 5 companies with a neutral rating
Sarepta isn't alone in having a make-or-break moment in 2021.
Biogen, which UBS initiated with a neutral rating, is expected to get a decision from the Food and Drug Administration by March on its potential treatment for Alzheimer's.
The analysts noted that they're not expecting the drug will get approved, leading to the neutral rating.
In total, UBS initiated coverage on five companies at a neutral rating: Alexion, PTC Therapeutics, Amgen, Biogen, and Gilead Sciences.