3 Biotech Stocks That Make The Grade For Investors

The happening but highly volatile biotech sector has been under immense pressure since the end of last year. Stressed balance sheets, growing political pressure on drug prices, and other broad-based factors had an impact on this sector, cutting short its phenomenal run.

But if we are to believe Alex Berenson who said “If only the human body could handle trauma as well as biotechnology stocks do”, the picture should not be as bad as it seems. The biotech stocks are still in favor and continue to intrigue investors.

With the Federal Reserve maintaining its dovish stance and Janet Yellen stating that they will “proceed cautiously” with interest rate hikes, the sector will continue to witness merger and acquisition (M&A) deals. Already, at the beginning of the year Shire plc (SHPG – Analyst Report) announced that it will be combining with Baxalta Incorporated (BXLT – Analyst Report) in a deal worth approximately $32 billion.

Meanwhile, in a bid to boost product portfolio and pipeline, we should continue to see partnerships among large cap and development-stage companies across different therapeutic areas like autoimmune, cardiovascular and central nervous system disorders, immuno-oncology and the hepatitis C virus (HCV).

In addition, commercialization and sales ramp up of products that gained approval last year like Imlygic, Ibrance, Strensiq, Praluent, Repatha and label expansion of existing drugs including Keytruda, regular pipeline updates should be flowing in from time to time.

Finally, who can forget that the first FDA-approved biosimilar, Zarxio – a biosimilar version of biotech major Amgen Inc.’s (AMGN – Analyst Report) blockbuster drug, Neupogen – entered the market last year. Biosimilars are being touted as the next big thing and biotechs are eyeing an entry into this space.

But the crucial question is, which one of these biotech stocks actually makes the grade for investors? We have picked three stocks using our Zacks style score system. Not only do these stocks have a VGM score (‘V’ for Value, ‘G’ for Growth and ‘M’ for Momentum) of ‘A’ but they also have a Zacks Rank #1 (Strong Buy) or #2 (Buy).