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Investing.com -- Deutsche Bank initiated coverage on 11 U.S. biopharma stocks in a note Tuesday, assigning Buy ratings to eight companies and Hold ratings to three.
The bank sees potential for a modest biotech recovery in 2025 following years of underperformance relative to broader market indices but warns of near-term macro volatility tied to the U.S. political environment.
“Our coverage universe focuses on small- and mid-cap biotechnology stocks (and selected large caps) in the central nervous system (CNS) therapeutic area,” Deutsche Bank (ETR:DBKGn) analysts wrote.
The firm expects continued investor and strategic interest in CNS, particularly in neuropsychiatry, epilepsy, and sleep-wake disorders, which have seen increasing capital markets activity over the past year.
Among the companies covered, Deutsche Bank’s top picks for 2025 are Axsome Therapeutics (NASDAQ:AXSM) and Xenon Pharmaceuticals (NASDAQ:XENE), both rated Buy, with price targets of $176 and $67, respectively.
“Our Top Picks for 2025 are AXSM and XENE, based on our highest conviction around major near-term catalysts, estimated total return over the next 12 months, and overall their risk/reward profiles,” the analysts wrote.
ALKS, AVDL, BHVN, DNLI, HRMY, and PRAX, were also rated at Buy.
Conversely, Neurocrine (NASDAQ:NBIX) Biosciences and Sarepta Therapeutics (NASDAQ:SRPT) received Hold ratings with price targets of $138 and $136, respectively, and were labeled as the firm’s least preferred names.
Deutsche Bank maintains a cautiously optimistic outlook on the sector, emphasizing that CNS remains one of the most attractive areas for drug development and investment.
However, the bank’s analysts caution that broader market conditions and macroeconomic uncertainties could impact performance in the near term.