I have always been wary of sell-side analysts prognostications, assessments, and most hyper-rosy price targets. The primary reason for this is the strong possibility of unhelpful bias coming into play. These biases can materialize as the result of an analyst's employer having an ownership stake in the company they are covering, when a sell-side analyst's brokerage firm is compensated by commissions on sales and when the brokerage firm has an investment banking arm (think public offerings).
I have compiled a list of three biotech companies that sell-side analysts seem to be very bullish on, including some pertinent details:
1. Amarin Corporation (NASDAQ:AMRN)
AMRN 52 Week Chart
Amarin is a clinical-stage biopharmaceutical company focused on developing improved treatments for cardiovascular disease. Its development programs capitalize in the field of lipid science and the therapeutic benefits of essential fatty acids in cardiovascular disease. The company is focusing its efforts on its candidate, AMR101, a prescription grade Omega-3 fatty acid, comprising not less than 96% ultra pure ethyl ester of eicosapentaenoic acid.
The stock closed Wednesday at $6.73. It currently has a market cap of $912M with 135.5M shares out and a book value of -22 cents per share. The consensus 12 month analyst price target is $25, representing a potential 271% increase in share price over the next year. Seven analysts cover the stock and the consensus rating is "Strong Buy".
Analysts covering Amarin:
Canaccord Genuity, Lazard, Morgan Joseph, Jefferies, Wedbush, Leerink Swann and Roth Capital.
2. Zalicus Inc. (ZLCS)
ZLCS 52 Week Chart
Zalicus, formerly known as CombinatoRx, is a biopharmaceutical company that develops drug candidates with a focus on the treatment of pain and inflammation. It has devoted nearly all of its resources to the development of its drug discovery technologies and the research and development of its drug candidates, including conducting preclinical and clinical trials and seeking intellectual property protection for its technology and product candidates.
The stock closed Wednesday at $1.29. It currently has a market cap of $128M with 99.24M shares out and a book value of 55 cents per share. The consensus 12 month analyst price target is $4.25, representing a potential 229% increase in share price over the next year. Six analysts cover the stock and the consensus rating is "Strong Buy".
Analysts covering Zalicus:
Canaccord Genuity, Oppenheimer, JPM Securities, Rodman & Renshaw, Wedbush and Zacks.
ZLCS Product Pipeline
3. Savient Pharmaceuticals, Inc. (SVNT)
SVNT 52 Week Chart
Savient is a specialty biopharmaceutical company that is focused on commercializing Krystexxa in the U.S. and completing the development and seeking regulatory approval outside of the U.S. for Krystexxa, particularly in the EU. It was approved for marketing by the FDA on September 14, 2010 and became commercially available in the U.S. by prescription on December 1, 2010.
The stock closed Wednesday at $2.24. It currently has a market cap of $160M with 71.47M shares out and a book value of 27 cents per share. The consensus 12 month analyst price target is $5, representing a potential 123% increase in share price over the next year. Nine analysts cover the stock and the consensus rating is "Buy".
Analysts covering Savient:
Bank of America/Merrill Lynch, Cowen & Co., JPM Morgan, JPM Securities, Leerink Swann, Collins Stewart, Global Hunter, Jefferies and Lazard.
SVNT Product Pipeline
You are free to research for yourselves as to which of the above listed analyst firms have done business in the past with the above listed biotechs they currently cover. As a friendly reminder, you should always check to see if an analyst firm has been an underwriter of the company's past offerings or owns a significant stake in the company. Also, thoroughly review the company's SEC filings, prospectus and financial statements. Keeping your mind open enough to understand and appreciate a stock's potential downside doesn't hurt any, either.
Disclosure: I am long AMRN.