Stock market crash alert: 3 biotech stocks to buy when prices plummet

The economic downturn and the accompanying decline in the stock market are unfortunate, but inevitable. Even fast-growing sectors such as the biotechnology sector are not immune to the general trend of recession that Western economies have experienced over the past 40 years or so. However, these economic downturns provide investors with an opportunity to buy stocks at lower prices. The same goes for which biotech stocks to buy in a down market.

Knowing when to buy stocks during market turbulence can be the difference between significant losses and growth. A market crash can substantially reduce the price of stocks that are currently trading at a higher price than their fair value.

Here are three biotech stocks that could be bargains during a recession.

Viking Therapeutics (VKTX)

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Despite a tough start to the market in April, Viking Therapeutics (NASDAQ:VKTX) has seen impressive growth over the past month. The company continues to grow, capitalizing on the surge in news of successful regulatory and clinical trials. However, none of the company’s drugs are actually on the market, so the company may be speculatively overvalued.

Much of the hype around Viking Therapeutics comes from one of its major projects, VK2809, which could one day help treat metabolic and liver disorders. Some analysts are even bullish on the company’s latest obesity drug, VK2735, as the obesity problem is becoming more serious around the world. However, neither of these products have generated sales revenue yet, so if the market crashes, VKTX could fall significantly.

If the company survives the selloff, it could be one of the best biotech stocks to buy at a discount. And if the company’s drugs hit the market, prices could soar beyond current analysts’ expectations.

Eli Lilly (LLY)

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Products currently popular among biotech analysts, Eli Lilly’s (New York Stock Exchange:Lily) Revenues are showing healthy year-over-year growth. The company can mainly thank diabetes treatment company Mounjaro and its two biggest hits. and Zepbound, which supports weight loss. The long-term effects of such a “silver bullet” remain to be seen, but he will continue to drive up LLY’s value.

Therefore, a stock market crash could modestly slow this growth while lowering the price of LLY stock. This comes from the fact that the company has real sales figures to back up its valuation, rather than clinical speculation. Therefore, the drop in price could make LLY stock one of the best biotech stocks to buy for a stable long-term investment.

Of course, this assumes that the company’s weight-loss drug does not have any unintended consequences for patients in the future.

CRISPR Therapeutics (CRSP)

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CRISPR Therapeutics (NASDAQ:CRSP) has recently seen its stock price soar thanks to regulatory approval for a new treatment. The company’s value soared toward the end of 2023 between Food and Drug Administration approval of its sickle cell anemia treatment and widespread analyst hype. But the hype died down as the $2.2 million price tag for the sickle cell anemia drug became reality. enter.

Some analysts say that after February’s highs, a correction was inevitable, but the stock still has room for a downtrend. Although the current price is stable, CRSP stock could take a big hit if a recession occurs. The concerns stem from the company’s primary focus on expensive gene therapies.

Economic downturns often dry up federal funding and grants for the type of research that CRSP relies on. In such a case, CRISPR could offer buyers a significantly cheaper entry point before the price falls further than the current trend and recovers.

On the date of publication, Viktor Zarev did not have (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer and are influenced by InvestorPlace.com. Publishing guidelines.