9 Biotech Stocks Trading At Steepest Discount To Target Price

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 |  Includes: AFFY, ALNY, ARIA, ARRY, GNOM, INCY, INHX, XOMA, ZIOP
by: Kapitall

One way to search for potentially undervalued names is by comparing current price to mean analyst target price. Stocks trading at significant discounts to target may be undervalued.

Of course, analyst prices tend to be inflated most of the time, so we ran a screen that used the most pessimistic analyst target price as the benchmark for our analysis.

In addition, we only focused on companies that have more than 5 analyst target prices (to make sure we only focus on companies that have decent analyst coverage).

We screened US-traded stocks in the biotech industry for those trading at the steepest discounts to even their most pessimistic target prices.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.‬

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

Do you think these stocks will meet their target prices? Use this list as a starting-off point for your own analysis.

List sorted by potential upside implied by target price.

1. Inhibitex Inc. (NASDAQ:INHX): Focuses on the development of differentiated anti-infective products to prevent or treat serious infections, primarily shingles and chronic infections caused by hepatitis C virus (HCV). Market cap of $294.78M. Of the 9 analysts that have set a target price on the stock, the lowest price target stands at $5.00. This implies a potential upside of 32.63% from current levels around $3.77. Exhibiting strong upside momentum--currently trading 20.86% above its SMA20, 19.32% above its SMA50, and 12.14% above its SMA200. The stock has had a good month, gaining 30%.

2. Affymax, Inc. (OTCPK:AFFY): Engages in the development of drugs for the treatment of serious and life-threatening conditions. Market cap of $189.48M. Of the 7 analysts that have set a target price on the stock, the lowest price target stands at $7.00. This implies a potential upside of 31.33% from current levels around $5.33. The stock has recently rebounded, and is currently trading 8.57% above its SMA20 and 15.14% above its SMA50. However, the stock still trades 10.88% below its SMA200. The stock has had a couple of great days, gaining 6.6% over the last week.

3. Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY): Focuses on the discovery, development, and commercialization of novel therapeutics based on RNA interference (RNAi). Market cap of $362.95M. Of the 7 analysts that have set a target price on the stock, the lowest price target stands at $11.00. This implies a potential upside of 29.26% from current levels around $8.51. The stock is a short squeeze candidate, with a short float at 10.56% (equivalent to 13.07 days of average volume). The stock has had a couple of great days, gaining 15.63% over the last week.

4. Incyte Corporation (NASDAQ:INCY): Focuses on the discovery and development of proprietary small molecule drugs for hematologic and oncology indications, and inflammatory and autoimmune diseases. Market cap of $1.86B. Of the 12 analysts that have set a target price on the stock, the lowest price target stands at $19.00. This implies a potential upside of 29.25% from current levels around $14.70. This is a risky stock that is significantly more volatile than the overall market (beta = 2.31). The stock is a short squeeze candidate, with a short float at 12.88% (equivalent to 9.28 days of average volume). The stock has had a couple of great days, gaining 7.14% over the last week.

5. ZIOPHARM Oncology, Inc. (NASDAQ:ZIOP): Focuses on the development and commercialization of in-licensed cancer drugs in North America. Market cap of $328.32M. Of the 6 analysts that have set a target price on the stock, the lowest price target stands at $6.00. This implies a potential upside of 25.00% from current levels around $4.80. The stock is a short squeeze candidate, with a short float at 12.48% (equivalent to 12.64 days of average volume). The stock has had a couple of great days, gaining 17.36% over the last week.

6. Array BioPharma, Inc. (NASDAQ:ARRY): Focuses on the discovery, development, and commercialization of small molecule drugs to treat patients afflicted with cancer and inflammatory diseases in North America, Europe, and the Asia Pacific. Market cap of $143.12M. Of the 5 analysts that have set a target price on the stock, the lowest price target stands at $3.00. This implies a potential upside of 19.52% from current levels around $2.51. The stock is a short squeeze candidate, with a short float at 5.96% (equivalent to 7.09 days of average volume). The stock has had a couple of great days, gaining 10.09% over the last week.

7. Ariad Pharmaceuticals Inc. (NASDAQ:ARIA): Focuses on the discovery, development, and commercialization of small-molecule drugs for the treatment of cancer. Market cap of $1.55B. Of the 10 analysts that have set a target price on the stock, the lowest price target stands at $14.00. This implies a potential upside of 19.45% from current levels around $11.72. Exhibiting strong upside momentum--currently trading 18.1% above its SMA20, 21.71% above its SMA50, and 35.38% above its SMA200. The stock has had a couple of great days, gaining 7.92% over the last week.

8. XOMA Ltd. (NASDAQ:XOMA): Engages in the discovery, development, and manufacture of therapeutic antibodies to treat inflammatory, autoimmune, infectious, and oncological diseases. Market cap of $55.01M. Of the 5 analysts that have set a target price on the stock, the lowest price target stands at $2.00. This implies a potential upside of 18.34% from current levels around $1.69. The stock has lost 28.09% over the last year.

9. Complete Genomics, Inc. (NASDAQ:GNOM): Develops and commercializes a DNA sequencing platform for human genome sequencing and analysis. Market cap of $172.29M. Of the 5 analysts that have set a target price on the stock, the lowest price target stands at $6.00. This implies a potential upside of 15.16% from current levels around $5.21. The stock is a short squeeze candidate, with a short float at 7.65% (equivalent to 6.59 days of average volume). The stock has performed poorly over the last month, losing 21.06%.

*Target price data sourced from Thomson/First Call (via Yahoo! Finance), all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.