With a rebound likely, investors are looking for biotech stocks to buy on the dip. According to Investor’s Business Daily, there’s been a collective 22.5% surge among the biotech stocks they’re tracking.
Still, the sector is well below its 2021 highs, making this a great time to buy biotech stocks on the dip.
Moreover, the sector’s stocks are well-positioned to keep climbing for a long time. That’s because the key factor that had been pushing them down for a long time –fears of sky-high interest rates –is receding.
This situation has arisen because core inflation appears to have peaked and gasoline prices are retreating. As a result, overall inflation is about to drop, and the Fed will not have to raise rates tremendously.
With that in mind, these are the three biotech stocks to buy on the dip:
| GSK | GSK | $20.47 |
| Dexco | DXCM | $82.18 |
| Schrodinger | SDGR | $32.67 |
GSK (GSK)
Trial results of the GSK (NYSE:GSK) dostarlimab drug suggest that the product is well-positioned to become “a blockbuster” cancer treatment.
In an unprecedented occurrence, all 18 rectal cancer patients who took the drug appeared to be completely cured. And they did not have any major side effects.
Consequently, I believe there is an excellent chance of dostarlimab generating hundreds of billions of dollars fir GSK.
Also importantly, analysts, on average, predict that GSK’s earnings per share will come in at $3.48 in 2023, up from their mean estimate of $3.22 for this year and the company’s actual EPS of $3.11 in 2021. And GSK’s forward price-earnings ratio is less than 12, while it has a hefty dividend yield of 4.9.
Dexcom (DXCM)
Dexcom (NASDAQ:DXCM) provides products that help diabetes patients.
In a note to investors on July 15, Bernstein analyst Lee Hambright began covering Dexcom with a $105 price target and an “outperform” rating.
According to the analyst, Dexcom’s Continuous Glucose Monitoring (CGM) product is the most precise CGM offering available and can interface with insulin pumps.
Additionally, he believes that Dexcom has a long runway. Hambright claims the company has only scratched the surface of its core market.
He is also very bullish on the company’s upcoming G7 CGM product, which has been approved in Europe and he thinks that it is likely to be approved by the FDA. According to another source, that approval could occur soon.
Analysts, on average, expect the company’s EPS to climb to $1.17 in 2023 next year from 82 cents this year. In 2021, Dexcom reported EPS of 67 cents.
Schrodinger (SDGR)
Schrodinger (NASDAQ:SDGR) obtained approval from the FDA “to study its computer-designed therapy for non-Hodgkin lymphomas in an early-phase trial.”
That was the first time that the agency agreed to allow the company itself to study one of its drugs derived from AI in a clinical trial.
Schrodinger used its technology to develop and select the drug in ten months. The company reports that its technology enables it to examine “billions of molecules per week with a high degree of accuracy,” versus the roughly “1,000 compounds” evaluated using traditional techniques.
The company added that “Our approach enables discovery of high-quality, novel molecules more rapidly, at lower cost, and we believe with a higher likelihood of success compared to traditional methods.”
Validating Schrodinger and its technology, the company is partnering with multiple, large pharmaceutical companies, and Bill Gates’ trust had nearly 7 million shares of SDGR stock as of the trust’s last report.
On the date of publication, Larry Ramer was long SDGR stock.