When investing in the stock market, it’s important not to underestimate the potential of down stocks. While it may seem risky to bet on a company experiencing a downturn, investing in a turnaround can be a risk-takers game.
Even though the market tends to overreact to setbacks, opportunities can be had for those with a longer-term perspective. Investors can sometimes realize massive returns by looking beyond short-term losses and considering a company’s potential for growth.
One example of this is in the biopharmaceutical industry. While risks are associated with investing in companies that have experienced a significant decline, there are also exciting opportunities for a strong comeback. By carefully considering the long-term potential of such companies, investors can identify undervalued stocks that could lead to significant gains in the future.
Zai Lab
Zai Lab, a biotech company in China, has seen its shares decline by 4.2% in the past year. However, experts are predicting a massive surge in the stock that will spread like wildfire. The company’s signature therapies are already circulating in China, and with a profitable future in sight, Zai Lab is attracting richer shareholders.
Thanks to new products in its pipeline, Wall Street is setting aggressive rates for the company and calling for a 98% raise to $81.04 within the next year. In the next five years, Zai Lab is expected to commercialize a new range of bioproducts, including treatments for rare cancers and other exotic cases. This new range of products is expected to become the backbone of the firm in the next decade, with its $215 million expected to double in the same period.
Furthermore, Zai Lab is also reportedly working on new neurology therapies that include many autoimmune disorders. Despite earlier skepticism due to Chinese companies facing regulatory changes, Zai Lab’s new products and growth potential generate buzz among investors.
Guardant Health
Despite ongoing profit generation, this cancer testing company has experienced a 63.6% share decline over the last three years. However, analysts on Wall Street are now tipping the stock to see a 30% increase in the coming year.
The company’s approach to testing kits sets them apart from everyone else in the field. They provide a comprehensive set of tests to evaluate patients at every stage in their oncology plan, with a wide range of solutions that include cancer screening, patient characterization, treatment, and remission monitoring.
According to the company, its revenue is projected to rise by 20% to over $540 million in 2023. However, for their shares to rise, their tests must be reimbursable by insurance firms in the US. This reimbursement is expected to happen sometime in 2023.
Once it happens, there will likely be an increase in the number of cancer patients who can be treated. The company believes this will help them achieve efficiencies in reimbursement operations.