While 2024 marked another “challenging” year for biotech stocks, some names could be slated for upside in the months ahead, according to JPMorgan. The market has seen sizable gains this year, with all three major averages solidly higher year to date. In fact, the Dow Jones Industrial Average and S & P 500 set new intraday and closing records this week. That said, biotech stocks specifically haven’t seen nearly the same level of gains. The Nasdaq Biotechnology Index is up just 6% in 2024. The S & P 500’s gains this year, by contrast, are more than four times that at nearly 26%. “Looking to 2025, we see biotech fundamentals continuing largely intact as companies post clinical and regulatory wins and execute on the commercial front – all of which underscores innovation,” analyst Jessica Fye wrote in a note to clients this week. “While the setup for 2025 remains somewhat uncertain with the incoming administration potentially impacting healthcare policy and the broader macro backdrop, we see this largely reflected in the sector’s sharp retrace post-election.” Sticking with their view that selectivity is “key” amid risk of future volatility in the space, the bank’s analysts unveiled their top biotech stocks heading into the new year. The analysts cited factors that could influence the group, such as improved affordability as a result of possible changes to Medicare benefits and enhanced activity in mergers and acquisitions. Below are some of the names that made the list. As “one of the highest quality names” in JPMorgan’s coverage, biotech giant Vertex Pharmaceuticals may be one to watch next year, as it is expected to launch two new products next year – its “vanza triple” combination medicine for cystic fibrosis, and its treatment for acute pain known as suzetrigine. The bank believes the latter in particular will bring in a diversified revenue stream for the company. On top of that, the company’s continued progress in their expansive pipeline as well as its acquisition of Alpine Immune Sciences earlier this year could set Vertex up for even more growth, the bank said. “Taken together, we see 2025 as a dynamic time for VRTX with the pipeline becoming increasingly derisked and see the company in the enviable position of being able to stack new products on top of its long-duration CF business,” Fye also wrote in the note. Wall Street is mostly bullish on Vertex, as 21 of the 35 analysts covering the stock have a strong buy or buy rating. Its average price target of $518.74 reflects more than 11% upside from Wednesday’s close. This year, shares have risen more than 14%. Edgewise Therapeutics has had a monster rally this year, with shares soaring more than 194%. Even with these gains, JPMorgan believes interest in the company’s promising neuromuscular and cardiovascular businesses – as well as enthusiasm for its new heart disease treatment EDG-7500 – could set the stock up to reach new highs. “Net-net, we see Edgewise potentially leveling up into the category of a more mature/diversified biotech as we enter and move through 2025,” analyst Tessa Romero wrote in the note. The Street overall is bullish on the stock. All of the six analysts covering Edgewise have a strong buy or buy rating, and its average target of $43.17 reflects around 34% upside ahead, as of Wednesday’s close, LSEG data shows. EWTX YTD mountain EWTX, year-to-date Roivant Sciences is another one investors should eye in the coming months, per JPMorgan. The stock has advanced 13% in 2024, and JPMorgan thinks it’s “well positioned” for continued expansion. “We believe the portfolio will see appreciation for several value drivers in 2025,” analyst Brian Cheng told clients. “With a ~$5bn war chest still to be deployed and a stock buyback program, we believe the cash pile protects against downside at current levels.”
