Seeking Alpha
Value, growth, long-term horizon, medium-term horizon
Profile| Send Message|
( followers)  

Looking for undervalued stocks but don't know where to start?

Value investors look for opportunities to buy stocks that are trading at significant discounts to their fair value, with the assumption that they'll move up to their fair value in the near future. One proxy for fair value is analyst target price.

We ran a screen on stocks of the biotech industry for those trading at steep discounts to their analyst target prices, which may indicate that they are undervalued.

But because target prices are notoriously inflated, we only used the most pessimistic (the lowest) target prices, and for stocks with sufficient analyst coverage we only screened for stocks with 5 or more analyst ratings.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the 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 are being undervalued? Use this list as a starting point for your own analysis.

List sorted by potential upside implied by target price.

1. Vical Inc. (NASDAQ:VICL): Engages in the research and development of biopharmaceutical products based on its deoxyribonucleic acid (DNA) delivery technologies for the prevention and treatment of serious or life-threatening diseases. Market cap of $322.74M. Of the 5 analysts that have set a target price on the stock, the lowest price target stands at $6.00. This implies a current upside of 33.63% from current levels around $4.49. The stock is a short squeeze candidate, with a short float at 9.78% (equivalent to 9.19 days of average volume). The stock has gained 116.91% over the last year.

2. Amyris, Inc. (NASDAQ:AMRS): An integrated renewable products company, offers renewable compounds for a variety of markets. Market cap of $558.90M. Of the 6 analysts that have set a target price on the stock, the lowest price target stands at $16.00. This implies a current upside of 30.40% from current levels around $12.27. The stock is a short squeeze candidate, with a short float at 16.17% (equivalent to 21.28 days of average volume). The stock has had a couple of great days, gaining 13.09% over the last week.

3. 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 $791.51M. Of the 12 analysts that have set a target price on the stock, the lowest price target stands at $13.00. This implies a current upside of 28.59% from current levels around $10.11. After a solid performance over the last year, INHX has pulled back during recent sessions. The stock has performed poorly over the last month, losing 33.22%.

4. Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY): Focuses on the discovery, development, and commercialization of novel therapeutics based on RNA interference (RNAI). Market cap of $370.04M. Of the 9 analysts that have set a target price on the stock, the lowest price target stands at $11.00. This implies a current upside of 27.02% from current levels around $8.66. The stock is a short squeeze candidate, with a short float at 9.72% (equivalent to 11.56 days of average volume). The stock has had a couple of great days, gaining 5.74% over the last week.

5. Questcor Pharmaceuticals, Inc. (QCOR): Provides prescription drugs for central nervous system and inflammatory disorders. Market cap of $2.49B. Of the 8 analysts that have set a target price on the stock, the lowest price target stands at $46.00. This implies a current upside of 15.99% from current levels around $39.66. The stock is a short squeeze candidate, with a short float at 11.71% (equivalent to 6.1 days of average volume). After a solid performance over the last year, QCOR has pulled back during recent sessions. The stock has gained 170.53% over the last year.

*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.

Source: 5 Biotech Stocks Deeply Discounted From Target Price