Virtually every industry is reeling from the ongoing sense of uncertainty surrounding Trump’s policies. That’s not to say the same for biotech stocks, which are up this year despite the broader market sell-off.
Looking ahead, most analysts remain generally optimistic about biotech’s growth for a couple of reasons.
Last year, biotech stocks added significant gains that helped offset prior losses, and an IPO spike in October—the sector’s second of the year—fueled even more excitement among analysts.
Economic uncertainty is also fueling optimism for much lower rates this year. According to the CME Fed Watch Tool, the markets are predicting at least two quarter-point interest rate cuts this year.
Tim Opler, managing director of Stifel’s Global Healthcare Group investment firm, emphasized the impact of interest rate cuts on the market at that time.
“The benefit of lower interest rates is that they make the long-term and high-risk cash flows of the biotech sector more attractive,” he said. “When interest rates are high, it’s very difficult to get excited about taking on, say, a potential payoff 10 years from now. Lower rates mean more value on those long-term bets.”
David Buller, managing partner of the digital health venture capital firm KELES, shared a similar outlook in light of the increased flow of funding to the biotech industry during the latter half of last year.
“Hopefully, the worst of everything is behind us,” he said. “We should see some very good signs of recovery in 2025.”
Even though investors are still waiting to see when—or if—the Fed will cut rates again, some biotech companies are already turning heads on Wall Street this year. One of them is TG Therapeutics (TGTX).
Analysts ramp up TGTX targets
After TG Therapeutics (TGTX) 's quarterly earnings report handily beat expectations, investors piled into the biotech company, which produces the multiple sclerosis medication Briumvi.
The stock jumped 17% on Monday and doled out another 3.5% on Tuesday, closing at $35.62.
In the weeks and months leading up to the latest stock upturn, analysts had been optimistic about its growth potential. JPMorgan increased its price target on TGTX in November and BofA followed suit earlier this year.
More recently, Evercore ISS analyst Michael DiFiore has offered generally encouraging, if conservative, guidance on the biotech firm. “As we write this note, the stock is up +15%, likely due to the very positive commentary/body language on future sales growth,” he determined.
Trump is mixed bag for biotech investors
Biotech might have a record for resilience, but it is also directly impacted by a host of external factors like government regulation and trade. Big payoffs for companies in this industry also involve massive investments — and the potential for major losses.
Despite all of those variables, analysts see a significant upside to this high-risk sector. In addition to TGTX, a handful of other players in this industry have been attracting positive Wall Street attention.
Viking Therapeutics (VKTX) has generated significant buzz around its development of a new weight-loss drug, among other projects. Despite remaining unprofitable, the company’s stock is adding to its 2024 gains.
The Trump administration presents a mixed bag of its own for the biotech sector.
Recently confirmed HHS Secretary Robert F. Kennedy Jr., for example, has voiced opinions on topics like vaccines and nutrition that could negatively impact biotech companies in those markets.
At the same time, Trump’s alliance with figures like former biotech CEO Vivek Ramaswamy and Dr. Mehmet Oz, a proponent of weight-loss drugs, might bode well for the sector over the next four years.
If all the funding, bureaucratic, and political pieces fall into place, and that’s a big if, TGTX’s recent rise could be a sign of things to come for the industry.
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