Piper Sandler bullish on biotech stocks amid market swings

On Friday, Piper Sandler reiterated its positive stance on the biotech sector despite recent market volatility, fueled by trade tensions and macroeconomic uncertainties. Analysts from the firm underscored the resilience of biopharmaceutical companies, citing several factors that position the industry for potential recovery. According to InvestingPro data, leading companies in the sector like Legend Biotech maintain "GOOD" overall financial health scores despite market challenges.

The biotech sector is deemed defensive as demand for pharmaceuticals remains constant, even during economic downturns. Additionally, biopharmaceuticals generally have limited exposure to tariffs and transfer pricing issues. This resilience is further supported by the expectation of reduced cost of capital due to anticipated interest rate cuts over the next year. Despite concerns around the FDA's unpredictability, the agency's core review team is expected to continue its work without significant delays, contributing to the sector's stability.

Innovation within biotech is at an all-time high, with the sector delivering an increasing number of life-saving therapies and potential cures each year. Piper Sandler highlighted several companies that stand out in the current environment, including Alnylam Pharmaceuticals , argenx, Axsome Therapeutics, Legend Biotech, Madrigal Pharmaceuticals, Neurocrine Biosciences, Soleno Therapeutics, and Verona Pharma.

Alnylam Pharmaceuticals (NASDAQ:ALNY) recently received FDA approval for AMVUTTRA in the treatment of ATTR cardiomyopathy and projected significant revenue growth in the coming years. The company is also set to initiate Phase III trials for other treatments, with expectations of transitioning to non-GAAP operating profit within the year.

argenx (NASDAQ:ARGX) continues to see commercial success with its therapy Vyvgart and is expected to maintain strong sales momentum. The company's growth is further supported by its expansion strategy and insulation from tariff concerns due to regional manufacturing.

Axsome Therapeutics (NASDAQ:AXSM) demonstrates potential for aggressive top-line growth, driven by its treatment Auvelity for major depressive disorder. The product's market exclusivity and potential label expansions are seen as key growth drivers.

Legend Biotech (NASDAQ:LEGN) forecasts significant sales growth for its CARVYKTI treatment and has a robust manufacturing expansion plan in place. The company also benefits from having no material tariff or transfer price exposure. InvestingPro data reveals impressive revenue growth of 120% in the last twelve months, with analysts expecting 63% growth next year. The company maintains strong liquidity with a current ratio of 4.62 and holds more cash than debt on its balance sheet. Four analysts have recently revised their earnings estimates upward for the upcoming period, though the company is not expected to be profitable this year.

Madrigal Pharmaceuticals (NASDAQ:MDGL) remains optimistic about the launch of its REZDIFFRA therapy, with expectations of a favorable market response and significant growth opportunities.

Neurocrine Biosciences (NASDAQ:NBIX) is highlighted for its continued growth potential, driven by its Ingrezza treatment and the launch of Crenessity, as well as its promising pipeline.

Soleno Therapeutics (NASDAQ:SLNO) has gained attention following the FDA approval of its VYKAT XR treatment for hyperphagia in patients with Prader-Willi syndrome. The company is well-positioned for a strong launch, supported by an experienced commercial team and high physician engagement.

Verona Pharma (NASDAQ:VRNA) has seen significant stock performance following the approval of OHTUVAYRE for COPD maintenance treatment. The company's management anticipates minimal impact from tariffs, with the majority of manufacturing occurring in the U.S.

Overall, Piper Sandler maintains an optimistic outlook for the biotech sector, highlighting these companies as key players poised for growth despite the challenging market conditions. Based on InvestingPro's Fair Value analysis, Legend Biotech appears undervalued at current levels, with analyst price targets ranging from $53 to $95. Discover comprehensive financial analysis, additional ProTips, and detailed valuation metrics for over 1,400 stocks with InvestingPro's Research Reports, helping you make more informed investment decisions in the biotech sector.

In other recent news, Legend Biotech Corp . has garnered attention with its latest developments. RBC Capital Markets has reiterated an Outperform rating with a price target of $84, noting the company's strong growth potential and path to near-term profitability. The firm highlighted Legend Biotech's fourth-quarter 2024 results and management's confidence in continued performance through 2025. Similarly, BMO Capital Markets maintained an Outperform rating with a $90 target, emphasizing the anticipated revenue increase in 2025 due to capacity expansion at key facilities. Piper Sandler also expressed optimism, projecting significant growth in global net sales for CARVYKTI, with sales expected to rise from $963 million in 2024 to $1.75 billion in 2025.

TD Cowen maintained a Buy rating with a $62 target, anticipating strong first-quarter performance for Carvykti, with global sales expected to surpass consensus estimates. H.C. Wainwright reaffirmed a Buy rating and $75 target, citing Legend Biotech's strategic positioning and resilience to tariff exposure. The firm's analysts highlighted the company's operational stability and effective intellectual property management. These recent developments reflect a positive outlook from multiple analyst firms, underscoring Legend Biotech's strategic growth initiatives and market positioning.

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