The following is a list of the most undervalued biotech stocks, when comparing the current price against the average analyst target price (used as a proxy for fair value).

Yes, there are many limitations to this approach, and we suspect there are many falling knives here. But the goal here is to give you a starting point for your own analysis.

Target price data sourced from Finviz. Full analysis below.

The list has been sorted by discount to analyst target price.

* 1. Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX)*: Market cap of $526.34M. Yesterday's closing price at $1.56 vs. target price of $2.25 (discount of -30.67%). Short float at 2.65%, which implies a short ratio of 12.33 days. The stock has gained 6.85% over the last year.

* 2. Corcept Therapeutics Inc. (NASDAQ:CORT): *Market cap of $263.63M. Yesterday's closing price at $3.66 vs. target price of $5.25 (discount of -30.29%). Short float at 1.79%, which implies a short ratio of 16.77 days. The stock has gained 59.13% over the last year.

* 3. American Oriental Bioengineering Inc. (AOB):* Market cap of $234.95M. Yesterday's closing price at $2.99 vs. target price of $4.17 (discount of -28.3%). Short float at 6.74%, which implies a short ratio of 10.57 days. The stock has lost -27.78% over the last year.

* 4. Cytori Therapeutics, Inc. (NASDAQ:CYTX):* Market cap of $218.61M. Yesterday's closing price at $4.38 vs. target price of $6.00 (discount of -27.00%). Short float at 13.71%, which implies a short ratio of 14.78 days. The stock has gained 23.38% over the last year.

* 5. Cypress Bioscience, Inc. (CYPB): *Market cap of $155.13M. Yesterday's closing price at $4.02 vs. target price of $5.50 (discount of -26.91%). Short float at 4.94%, which implies a short ratio of 3.11 days. The stock has lost -40.71% over the last year.

* 6. Emergent BioSolutions, Inc. (NYSE:EBS): *Market cap of $614.54M. Yesterday's closing price at $17.70 vs. target price of $24.10 (discount of -26.56%). Short float at 6.85%, which implies a short ratio of 8.56 days. The stock has gained 13.03% over the last year.

* 7. Idenix Pharmaceuticals Inc. (NASDAQ:IDIX):* Market cap of $312.31M. Yesterday's closing price at $4.28 vs. target price of $5.80 (discount of -26.21%). Short float at 9.39%, which implies a short ratio of 9.05 days. The stock has gained 122.92% over the last year.

* 8. VIVUS Inc. (NASDAQ:VVUS):* Market cap of $572.18M. Yesterday's closing price at $7.05 vs. target price of $9.25 (discount of -23.78%). Short float at 16.33%, which implies a short ratio of 3.73 days. The stock has lost -4.6% over the last year.

* 9. Micromet, Inc. (NASDAQ:MITI): *Market cap of $622.81M. Yesterday's closing price at $7.69 vs. target price of $10.07 (discount of -23.63%). Short float at 6.29%, which implies a short ratio of 19.16 days. The stock has gained 28.17% over the last year.

* 10. Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN):* Market cap of $2.15B. Yesterday's closing price at $26.10 vs. target price of $33.89 (discount of -22.99%). Short float at 6.95%, which implies a short ratio of 9.77 days. The stock has gained 66.14% over the last year.

* 11. Acorda Therapeutics, Inc. (NASDAQ:ACOR):* Market cap of $1.08B. Yesterday's closing price at $27.70 vs. target price of $35.52 (discount of -22.02%). Short float at 17.53%, which implies a short ratio of 9.15 days. The stock has gained 16.48% over the last year.

* 12. Nektar Therapeutics (NASDAQ:NKTR): *Market cap of $1.31B. Yesterday's closing price at $13.94 vs. target price of $17.75 (discount of -21.46%). Short float at 10.27%, which implies a short ratio of 19.07 days. The stock has gained 56.98% over the last year.

* 13. Targacept, Inc. (TRGT): *Market cap of $694.04M. Yesterday's closing price at $24.25 vs. target price of $30.57 (discount of -20.67%). Short float at 3.75%, which implies a short ratio of 10.71 days. The stock has gained 20.59% over the last year.

* 14. Martek Biosciences Corp. (MATK): *Market cap of $748.95M. Yesterday's closing price at $22.37 vs. target price of $27.80 (discount of -19.53%). Short float at 22.25%, which implies a short ratio of 27.5 days. The stock has gained 21.44% over the last year.

* 15. PROLOR Biotech, Inc. (NYSEMKT:PBTH):* Market cap of $344.8M. Yesterday's closing price at $6.48 vs. target price of $8.0 (discount of -19.%). Short float at 1.49%, which implies a short ratio of 10.44 days. The stock has gained 346.9% over the last year.

* 16. Incyte Corporation (NASDAQ:INCY): *Market cap of $1.95B. Yesterday's closing price at $16.0 vs. target price of $19.67 (discount of -18.66%). Short float at 12.22%, which implies a short ratio of 8.72 days. The stock has gained 120.69% over the last year.

* 17. PDL BioPharma, Inc. (NASDAQ:PDLI):* Market cap of $666.78M. Yesterday's closing price at $5.57 vs. target price of $6.80 (discount of -18.09%). Short float at 7.62%, which implies a short ratio of 3.33 days. The stock has lost -8.84% over the last year.

* 18. Theravance Inc. (THRX): *Market cap of $1.53B. Yesterday's closing price at $20.72 vs. target price of $25.17 (discount of -17.68%). Short float at 11.7%, which implies a short ratio of 13.6 days. The stock has gained 39.91% over the last year.

* 19. Obagi Medical Products, Inc. (NASDAQ:OMPI): *Market cap of $243.76M. Yesterday's closing price at $11.06 vs. target price of $13.25 (discount of -16.53%). Short float at 4.19%, which implies a short ratio of 10.79 days. The stock has lost -1.51% over the last year.

* 20. Enzon Pharmaceuticals Inc. (NASDAQ:ENZN)*: Market cap of $640.26M. Yesterday's closing price at $10.73 vs. target price of $12.75 (discount of -15.84%). Short float at 9.37%, which implies a short ratio of 13.14 days. The stock has gained 19.49% over the last year.

**Disclosure: **No positions