Is Black Diamond Therapeutics, Inc. (BDTX) a Good Biotech Penny Stock to Buy Right Now?

We recently compiled a list of the 10 Best Biotech Penny Stocks to Buy Now. In this article, we are going to take a look at where Black Diamond Therapeutics, Inc. (NASDAQ:BDTX) stands against the other biotech penny stocks.

Biotech Stocks in 2024: Growth Prospects, Key Players, and Investment Opportunities

In 2024, the healthcare industry has been doing well, encouraging investors to look into new and exciting opportunities. Particularly biotech is anticipated to profit, despite the dangers of continuous mergers and acquisitions. Traders ought to exercise caution. With an 11.8% CAGR, the worldwide biotechnology market is expected to reach USD 4.25 trillion by 2033. It is expanding quickly. The U.S. market is projected to increase at an 11.90% CAGR to reach USD 763.82 billion by 2033 from its 2023 valuation of USD 246.18 billion. In 2023, the U.S. led North America in terms of revenue share.

Fitch Ratings maintains a Neutral outlook for the global biotech industry in 2024. Its primary motivation to do so is the moderating inflationary rates. The industry is supported by factors such as a growing aging population, increased healthcare access, and a rise in chronic and specialist conditions. Fitch also forecasts a heightened focus on drug pricing and patient value.

Biotech equities including Vincerx Pharma (VINC), Corbus Pharmaceuticals (CRBP), and Viking Therapeutics (VKTX) have seen significant gains in 2024, with returns ranging from 134% to 446%, despite receiving less media attention than industries like technology and cryptocurrencies. Positive weight loss drug trial findings, for example, let Viking Therapeutics connect its product with a potentially billion-dollar market need. Although the success of individual stocks indicates prospective gains, larger indexes such as the NASDAQ Biotechnology PR USD Index reveal the volatility of the industry; it fell 11% between 2022 and 2023 as a result of economic difficulties but gained 3% by February 2024.

Investors eyeing biotech stocks may wonder which areas are prone to buyouts. Laura Chico identified key areas to watch for potential buyouts:

“Obesity has been a really big theme in 2023, and will probably continue for the foreseeable future, but across the area, at least in these recent M&A transactions, it's been really broad-based, and I think that's really a testament to the innovation in the space. We have several deals in oncology, immunology, inflammation, neuro, and even rare diseases. So it's not just within certain verticals at this point.”

Chico advises biotech investors to monitor FDA approval news, scientific and clinical risks, and the disease categories that companies are targeting since these might provide indicators of company success. On March 6, Healthcare Equity Strategist Jared Holz talked about this possibility on CNBC's "The Exchange”:

"[Biotech] has been one of the worst spaces in all of the equity market since mid-2021. We've barely seen any positive activity for any pronounced period until very recently... When you consider the risk factors, concerning drug prices and other elements of the business... all these risk factors are much more well understood and we can continue to move higher from here."

Holz emphasizes the potential in well-positioned small-cap choices and says it's not too late to invest in large-cap biotech equities. We've put up a list of oversold biotech stocks, which includes excellent choices under $20 as well as cheap options that have been missed.

Our Methodology 

To rank the best biotech penny stocks to buy now, we first identified large biotech companies priced under $5. We then selected the top 10 and ranked them based on the number of hedge fund holders in Q1 2024.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

A close-up of a chemist examining a vial of a small molecule inhibitor for oncogenic proteins.

Black Diamond Therapeutics, Inc. (NASDAQ:BDTX)

Number of Hedge Fund Holders: 15 

Black Diamond Therapeutics, Inc. (NASDAQ:BDTX) is a biotechnology company focused on discovering and developing targeted therapies for cancer patients. The company specializes in targeting unique oncogenic protein isoforms, aiming to create precision medicines for specific cancer types. At the 2024 ASCO Annual Meeting, Black Diamond recently revealed encouraging Phase 1 clinical data for BDTX-1535 in glioblastoma patients who had recurrent disease.

The medication showed dose-proportionate plasma exposure and a 15-hour half-life on average, which supported daily use. Peak worldwide sales of BDTX-1535 may surpass $1 billion if both glioblastoma multiforme (GBM) and Tagrisso-resistant non-small cell lung cancer (NSCLC) are successfully treated.

Black Diamond Therapeutics, Inc. (NASDAQ:BDTX) has a Strong Buy rating based on recent research conducted during the last three months by five Wall Street analysts. With a forecast range of high $16.00 to low $11.00, the average price target is $13.50. This represents a predicted rise of 187.23% from the $4.70 trade price as of right now. In Q1 2024, 15 hedge fund holders held the company with RA Capital Management being the hedge fund with the largest shares (3,525,754 shares) worth $17,875,573, comprising 0.22% of the stock portfolio.

Black Diamond Therapeutics, Inc. (NASDAQ:BDTX) reported a net loss of $18.2 million during the first quarter of 2024, down from $20.9 million for the same period in 2023. The basic and diluted net loss per share for Q1 2024 was $0.35, a 38.6% decrease from Q1 2023's $0.57. The company's cash, cash equivalents, and investment holdings decreased to about $115.2 million as of March 31, 2024, from $131.4 million at the end of 2023. Research and development costs fell to $13.5 million from $14.8 million in Q1 2024, mainly as a result of lower investment in early discovery programs. Overall operational expenses dropped to $20.2 million from $21.6 million in Q1 2023.

Overall BDTX ranks 9th on our list of the best biotech penny stocks to buy. You can visit 10 Best Biotech Penny Stocks to Buy Now to see the other biotech penny stocks that are on hedge funds’ radar. While we acknowledge the potential of BDTX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BDTX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

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Disclosure: None. This article is originally published at Insider Monkey.