In the world of upstart pharmaceuticals and healthcare companies, timing is everything. These firms often struggle for an extended period of time before becoming profitable, but when they see success with a new product—or even clinical trial results suggesting a new product could be on the horizon—they can experience huge rallies in a very short period of time.
While timing the market is typically a losing proposition for investors, there is something to be said for tracking firms that other investors are interested in. Investors exercising caution should beware of the risk of entering a position in a trending stock too late after it has already peaked.
With healthcare firms, this window can be incredibly small. Nonetheless, three such companies that have recently appeared frequently on MarketBeat reader watchlists include Viking Therapeutics Inc. (NASDAQ: VKTX), Absci Corp. (NASDAQ: ABSI), and Elevance Health Inc. (NYSE: ELV).
Viking's VK2735: A Potential Game-Changer in the GLP-1 Weight Loss Market Amid Investor Uncertainty
[content-module:Forecast|NASDAQ: VKTX]Clinical-stage biopharma firm Viking has been at the top of many investors' minds because of recent headlines about its potential contribution to the red-hot GLP-1 agonist space. These drugs—the most prominent examples of which include Ozempic by Eli Lilly & Co. (NYSE: LLY) and Wegovy by Novo Nordisk A/S (NYSE: NVO)—have dominated the medical industry in recent months for their capacity to aid patients attempting to lose weight. Viking's VK2735, which completed enrollment for a Phase 2 clinical trial on March 26, could break up what is essentially a duopoly between the two much larger companies.
Initial studies of Viking's drug candidate suggest that it may help patients achieve weight loss faster than some of the GLP-1 agonists already on the market. The company also may have an advantage over other GLP-1 drugs because it is developing VK2735 in both injectable and oral formulations, which should appeal to needle-averse customers.
On the other hand, investors have grown impatient as they wait for a Phase 3 trial on VK2735, with some suggesting that Viking has moved too slowly through the process. That's one reason why shares of VKTX are down more than 67% in the year leading to March 27, 2025. Investors optimistic about the longer-term prospects of VK2735 might find that the price drop offers an opportunity to buy the dip.
Absci's AI-Driven Drug Development Shows Promise, But Investors Eye Rising Losses and Cash Burn
[content-module:Forecast|NASDAQ: ABSI]Absci utilizes AI technology in its drug identification and creation process. The firm has recently noted some significant successes with its platform, including the announcement in December of its ABS-201 program for androgenic alopecia and promising pipeline candidates in the areas of inflammation treatment and immuno-oncology, among others.
As the company ramps up its drug development platform, investors won't be surprised to see that expenses—and net losses—have mounted. In the fourth quarter of 2024, for example, research and development costs climbed by roughly 50% year-over-year (YOY), contributing to net losses that widened to $29 million from $23.5 million a year prior.
Maintaining cash reserves until Absci builds its capacity to generate revenue will be essential. The company's cash and equivalent reserves dwindled to $112.4 million as of the end of 2024 from $127.1 million three months prior. On the plus side, though, Absci's gross use of cash and equivalents for the full year came in below external forecasts. Investors are optimistic that Absci can continue to moderate its spending while advancing its potential drug candidates, and they might find that its decline of 48% in the last year warrants a buy while shares are cheap.
Elevance: A Defensive Play in Healthcare With Strong Valuation and AI-Driven Growth Potential
[content-module:Forecast|NYSE: ELV]As a major health benefits provider, Elevance is well-established and operates outside the pharmaceutical space, unlike the companies mentioned above. This makes it a defensive healthcare play that can help balance riskier investments for cautious investors.
Elevance has attractive value metrics, including a price-to-sales ratio of 0.55 and a comparably low forward price-to-earnings ratio of 12.7. As the company continues to integrate AI, it is likely to boost efficiency and margins.
And while there is widespread uncertainty about the impact of changing regulations on the health benefits industry, Elevance's strong position should allow it to withstand any challenges. Fourteen out of 16 analysts have rated it a Buy, with a consensus price target more than 21% above where shares are trading as of March 27, 2025.
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