(BFM Bourse) – The research office expects the good performance of biotechnology stocks to continue in 2021 … and cites a French representative of the sector among its favorite stocks.
After a prosperous 2020 financial year for European health and biotech stocks (including at the French level, in which investors have never been so interested), the sector should continue its performance in 2021. This is the conviction of the Jefferies’ biotech team (four analysts, including three doctors and a CFA, in other words a financial analyst), which this week has drawn up the list of its favorite stocks.
The optimism of the design office is based on four main factors.
1) Reforms affecting the American health sector will surely be at the heart of the concerns of the new administration. But for now, the fight against Covid-19 will remain the top priority, and the primary objective will be to extend / improve the coverage of the population. On the price of drugs, Jefferies believes rather in measures taken, not in a draconian reform to a point that would discourage innovation and research.
2) A regulatory context characterized by a pragmatic approach in terms of benefit / risk analysis and a desire to accelerate the availability of the most effective treatments to patients should lead to the approval of new drugs representing therapeutic breakthroughs, in particular to basis of cell and gene therapies.
3) The consolidation of the sector in the form of complementary acquisitions (of small players by bigger ones) with the appropriate level of bonuses, rather than through mega-mergers of already large players in the health sector.
4) Reasonable valuations in Europe, especially relative to US peers, but also relative to other growth sectors, with most stocks still trading below the net present value calculated by Jefferies.
A tricolor value in the spotlight
“Ultimately, we believe that the real clinical benefits will always be rewarded and we expect the sector to remain driven by continuous innovation from small and mid caps”, summarizes the research office. In this context, Jefferies prefers biotechs with a portfolio of innovative candidates based on new technologies, capable of positioning themselves favorably in increasingly competitive markets. And among his favorite values is a tricolor biotech. “Our top picks are Lonza, Genmab, PureTech, Nanobiotix, and Acacia,” notes Jefferies.
Its analysts advise in particular the purchase of the French pioneer of nanomedicine. “We believe that enthusiasm for the NBTXR3 radio-enhancer will increase with new data in leading indications, plus the potential for the first semester to start a phase 3 study in head and breast cancer. As a single injection treatment, fully compatible with standard radiotherapy protocols, NBTXR3 could be used in nearly 60% of cancers treated by x-rays “, estimates the research department. His target on Nanobiotix is set at 20 euros.
Guillaume Bayre – © 2021 BFM Bourse