When it comes to seeking growth stocks with the potential to double your investment, the healthcare sector is where you should be looking. In recent weeks, two promising options in this sector, CRISPR Therapeutics (NASDAQ: CRSP) and Ginkgo Bioworks (NYSE: DNA), have experienced some downward movement. However, Wall Street’s investment bank analysts believe they are poised for a comeback based on consensus price targets. But before you dive in, let’s delve into what you need to know about these stocks.
CRISPR Therapeutics:
CRISPR Therapeutics has witnessed a 37% decline from its summer peak. Yet, investment bank analysts remain optimistic, with a consensus price target indicating a potential 102% surge over the next 12 months. It’s important to note that CRISPR Therapeutics is yet to establish a consistent revenue stream. However, this might change by the end of the year, as the company, in collaboration with Vertex Pharmaceuticals, has applications accepted by the FDA for its lead candidate, exa-cel, designed to treat hemoglobin-related disorders. Exa-cel has the ability to alter stem cells to stimulate the production of fetal hemoglobin. Approval decisions for sickle cell disease and transfusion-dependent beta-thalassemia treatments are expected shortly.
While the stock presents a chance for doubling, the risks are substantial. Achieving profitability solely through the sales of this rare disorder treatment might be a challenge. Therefore, if you are risk-averse, it might be best to wait until the company’s business matures.
Ginkgo Bioworks:
Ginkgo Bioworks has seen a similar decline, around 36% from its summer peak, but Wall Street analysts anticipate a significant rebound, with a consensus price target suggesting a potential 148% gain in the coming year. Ginkgo Bioworks operates as a synthetic biology company, offering custom microorganism engineering services to third-party manufacturers. This includes a recent project with Braskem to engineer bacteria capable of producing ethylene glycol from sugar cane pulp.
Ginkgo Bioworks also has an active biosecurity segment, as evidenced by its collaboration with Texas A&M University to monitor the state’s whitetail deer population for COVID-19-related viruses. Although the company has added 21 new programs and experienced a 72% YoY increase in cell engineering services revenue, its overall revenue growth has been relatively modest.
However, Ginkgo Bioworks, like many other synthetic biology companies, is grappling with chronic losses. In the second quarter, operations saw a $184 million loss, and the first half of the year incurred a $400 million loss. If you’re not comfortable with a high level of risk, it may be wise to keep an eye on this stock until its underlying business stabilizes.
In conclusion, these two healthcare sector stocks hold significant growth potential, but they also come with substantial risks. It’s crucial to conduct thorough research and assess your risk tolerance before considering an investment in either of these companies.
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