( MENAFN - GetNews) Identifying biotech Stocks with the potential to deliver superior returns is no easy feat. There are specific milestones that companies can achieve to signal positive momentum to investors. For example, smaller biotech companies may have received the nod from regulatory authorities such as the FDA, or new breakthroughs from clinical trials, to offer a compelling investment opportunity.
The biotech sector is finally beginning to recover following a two year stretch of underperformance that was largely driven by rising interest rates and other macro factors. Biotech has a track record of strong recoveries, with the sector typically seeing double-digit gains after a downturn. This is something investors shouldn't ignore.
This recent turnaround can be credited to a robust increase in fundraising efforts and an uptick in IPOs, reaching levels not seen since the peak of the mid-pandemic market boom. According to the Financial Times, drug developers raised $6 billion in equity capital markets in January, the largest total since February 2021 – a period when biotech stocks hit their all-time high. Moreover, the SPDR S&P Biotech ETF (XBI) returned 28.
7% over the past six months alone, clearly illustrating investors' rising confidence in the biotech rebound. Identifying biotech stocks with the potential to deliver superior returns is no easy feat. There are specific milestones that companies can achieve to signal positive momentum to investors.
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