Top Biotech Stocks to Watch: Key Takeaways
- Moderna makes a comeback with renewed vax buzz…
- Conference appearances ignite a few biotech rallies…
- IVERIC bio sees a perfect trading storm…
I gotta say … I love biotech stocks — they can be both predictable and unpredictable. Recent action in the sector is a perfect example of that. Check that out and see the top five biotechs I’m watching now (details below).
- Moderna, Inc. (NASDAQ: MRNA … read my analysis here)
- uniQure N.V. (NASDAQ: QURE … read my analysis here)
- Travere Therapeutics, Inc. (NASDAQ: TVTX … read my analysis here)
- Aurinia Pharmaceuticals Inc. (NASDAQ: AUPH … read my analysis here)
- IVERIC bio, Inc. (NASDAQ: ISEE … read my analysis here)
What Does a Biotech Company Do?
Before you trade biotech stocks, it’s smart to know what they do…
Biotech companies develop drugs, treatments, therapies, and vaccines for a range of health issues. Again, these stocks became more popular after vaccine development took the spotlight last year.
Biotech stocks have good days and bad days. Drugs and vaccines take a lot of time and money to develop. And all that time and money can go down the drain if the FDA doesn’t give a drug or therapy its stamp of approval.
Traders like these stocks because they can make big, volatile moves on news. That can mean more risk, so you must be ready for the action.
How Biotech Stocks Performed in 2020
Like any sector, it’s not wise to judge the performance of biotechs on how a handful of stocks did. Some biotech stocks were home runs and others were strikeouts.
We can use a few ETFs to help tell the story, though…
The SPDR S&P 500 ETF tracks the performance of the S&P 500 and gives us a decent baseline for comparison.
SPY returned 72% from the March 2020 lows and 15% for the full year.
The SPDR S&P Biotech ETF tracks the biotech sector. XBI outdid SPY, delivering a 122% bounceback from March lows. It returned 49% for the entire year.
Market-mirroring ETFs and indexes often win out, but 2020 proved that hot sectors can crush them. In 2020, biotech was one of those sectors.
5 Biotech Stocks to Watch: September 15, 2021
Let’s look at five biotech stocks to watch now.
First, a quick note … Some of these stocks are a bit higher priced.
Here’s my hack: the rule of 10. Just move the decimal point in the price over one place or more … It’s how you can turn a $200 stock into a $20 stock.
I’m not saying that’s appropriate for every stock, but it can help you see the price action more like a lower-priced stock.
There’s also the sympathy play route. Strong action in higher-priced stocks can sometimes power smaller stocks — just by being in the same sector. Use that knowledge as you do your research and build your watchlists.
Biotech stocks have been up and down recently. But recent weeks have been an example of how a strong catalyst like earnings can ignite a sector.
Biotech Stocks to Watch #1: Moderna, Inc. (NASDAQ: MRNA)
MRNA is a perfect example of why you shouldn’t take a stock off your watchlist just because it lost a little steam…
This stock gapped up nicely in July and August but fizzled over the past month or so. Last week it popped again, jumping about 12%.
I’d keep every vax biotech on a watchlist. Vaccines and boosters will be a talking point throughout the remainder of 2021 — AT LEAST.
The majority of MRNA’s jump last week came from the announcement of a potential double-dipper vaccine … Moderna wants to combine its COVID booster shot with a flu shot.
The flu shot is still experimental, so nothing’s final yet. But it’s another potential catalyst for this stock. Moderna’s COVID vaccine is also still under FDA review for full approval.
MRNA is heading back toward all-time-high territory…
Biotech Stocks to Watch #2: uniQure N.V. (NASDAQ: QURE)
Gene therapy company uniQure jumped 13% last week after announcing its participation in five upcoming conferences.
These kinds of announcements are usually a decent catalyst for gap-ups … Why would a company attend a conference if it didn’t have anything positive to say?
All five conferences will be this month and will allow uniQure the opportunity to speak directly to investors.
QURE currently has six treatments in its pipeline. Its leading treatment is in Phase 3 and is a potential treatment for hemophilia B, a genetic bleeding disorder.
It’s also in early developments of treating Huntington’s disease, a progressive brain condition caused by a defective gene.
The gene therapy space is competitive. Maybe these conferences will help shake out the companies most worth watching.
The market seems to be quite interested in QURE. This thing could be ripe for a run if the company announces good trial results.
It’s heading toward a key area of resistance…
Biotech Stocks to Watch #3: Travere Therapeutics, Inc. (NASDAQ: TVTX)
TVTX jumped 11.7% last week after announcing a positive outcome from its Type A meeting with the FDA.
My personal opinion? The market overreacted a bit to this news. A Type A meeting isn’t necessarily a good sign for a clinical drug program.
It usually means there’s some sort of disagreement between the company and the FDA. The FDA may want more data for the program to move forward.
It could be a good sign, too … If the FDA gives feedback, that could help the company improve its chances of moving forward.
TVTX is up 53% over the past month thanks to its progress with sparsentan, a hopeful kidney disease treatment. This is the treatment that the FDA wanted more data on.
This is a Phase 3 treatment, so it may not be far from FDA approval. That would be a great catalyst for a jump higher.
Biotech Stocks to Watch #4: Aurinia Pharmaceuticals Inc. (NASDAQ: AUPH)
AUPH gapped up 13% last week after announcing it would participate in the H.C. Wainwright 23rd Annual Global Investment Conference, September 13–15.
It’s the same story as QURE … Companies aren’t likely to get in front of investors and deliver bad news.
These ‘buy the rumor, sell the news’ plays are some of my favorites. Traders want to be in and out of positions FAST.
So learn to ride the wave up and cash out before the actual news comes. Then, if the news is solid, you can jump back in and ride the momentum higher.
The market has loved this stock over the past month. It’s now heading toward a key area of resistance that’s held up since the beginning of 2020.
If it can finally break through, it has a chance at new all-time highs…
Biotech Stocks to Watch #5: IVERIC bio, Inc. (NASDAQ: ISEE)
Does a 62.5% intraday jump interest anyone — or is it just me?
That’s what we got from ISEE to close last week after its announcement that, like AUPH, it would present at the H.C. Wainwright Conference.
I think that’s what you call a perfect trading storm.
We’ve seen something of an inverse head and shoulder pattern forming with this one since June. Once the stock hit that neckline, it rocketed to the upside.
All eyes are on ISEE’s Phase 3 trial for Zimura, its treatment for geographic atrophy. That’s an advanced form of age-related macular degeneration. The company expects topline data in about a year.
This is a clinical-stage biotech that will jump on small bits of news and crumble with any disappointment. Those swings are attractive to traders, but be careful of the downside.
ISEE needs to form some support for me to feel comfortable with it. But it’s definitely on the watchlist after last week’s jump.
See the Stocks I’m Watching
No matter what’s happening in the overall market, there are always stocks that slip through the cracks.
That’s why I try to cast a wide net and watch as many stocks to help YOU catch the action.
Every Sunday, I’ll send you a list of stocks I think are worth watching in the upcoming week.
And I’ll include a detailed analysis of each pick. I also may look back at recent picks to break down recent picks. That’s critical for learning and preparing for future trades.
In the biotech sector, the right catalyst can supercharge stock runs. That’s great news for prepared traders. But you have to know what to watch … like trial results or FDA approvals.
That’s why keeping an eye on the news is so important. With StocksToTrade and our Breaking News Chat add-on, we do our best to help make that easier for you … See how the latest news can change your trading day. Grab your 14-day trial of STT + BNC today for just $17!
And remember, this is a list of stocks to watch — not trade recommendations. Do your own research and make your plans.
Biotech stocks can come with a lot of fun momentum, but you must be ready for it. That all starts with your watchlist. Get crackin’!
How do you watch and trade biotech stocks? Let me know with a comment below!