Stocks have been stagnant so far this year, with the S&P 500 up about 1% and the Nasdaq down 1.5%. Tech stocks have struggled to regain last year’s momentum as investors reassess the durability of AI-driven spending, the impact of massive capital spending on margins, and whether growth rates can justify the premium multiples many companies still carry.
Doubts about big tech stocks with generous valuations have prompted investors to look elsewhere for returns, and biotech stocks are clear beneficiaries. The Nasdaq Biotech Index has risen 30% over the past year, more than double the S&P 500’s gain, as capital shifts to areas where valuations appear more attractive and the gains are driven by tangible catalysts.
Growth in the biotech sector is supported by improving fundamentals across the sector. Encouraging clinical data, regulatory approvals and a pickup in M&A activity have boosted risk appetite, while bond yields below previous peaks have improved the backdrop for long-term growth assets such as development-stage drugmakers.
Against this backdrop, Bank of America analysts have set their sights on two biotech stocks that they believe could deliver significant gains in the coming months—one with a potential upside of as much as 240%. If that’s not compelling enough, both names also have a unanimous Strong Buy consensus rating, according to the TipRanks database. Let’s take a closer look at what’s driving this belief on Wall Street.
enzyme inhibitor therapy(IKT)
The first U.S. bank pick we’re looking at is Inhibikase Therapeutics, a small biotech company focused on kinase biology, with a major focus currently targeting pulmonary arterial hypertension (PAH). It’s a brutal disease driven by the progressive narrowing and remodeling of pulmonary blood vessels, forcing the heart to pump blood against rising resistance, ultimately leading to heart failure. Inhibikase’s argument is simple: If you can slow down the underlying vascular remodeling, you have the potential to move beyond symptom management and into disease remission.
Although PAH is a rare disease, it represents a huge commercial opportunity. According to Research and Markets, the global PAH market will be worth US$8.29 billion in 2024 and is expected to reach nearly US$12 billion by 2030 as demand for new treatments continues to increase.
Inhibikase’s lead drug candidate, IKT-001, is an oral prodrug of imatinib, a well-known kinase inhibitor originally approved for certain cancers. The goal is to retain imatinib’s proven efficacy in PAH while improving tolerability—a limitation that has historically hindered its wider use in this setting.
In a Phase 1 study in healthy volunteers, IKT-001 was generally well tolerated, with pharmacokinetic data showing exposure levels comparable to imatinib. These findings help establish dose equivalence and support the drug’s entry into trials in patients with PAH.
Importantly, the company announced in November 2025 that, based on feedback from the FDA, it had received approval to bypass the planned Phase 2b trial and move directly into the pivotal Phase 3 program IMPROVE-PAH. The two-part adaptive, randomized, double-blind, placebo-controlled study is expected to begin this quarter and may enroll up to 486 patients at 180 sites worldwide. Ahead of this key initiative, the company strengthened its balance sheet by raising $100 million in gross proceeds last November.
Bank of America’s five-star analyst Jason Zemansky believes IKT’s late-stage assets are targeting a multi-billion dollar market and its $1.76 share price reflects an attractive entry point.
“Given the compelling mechanistic rationale, good phase 1 data and prescriber enthusiasm for TKIs, we believe the stock is undervalued,” Zemansky said. “While we acknowledge that research on ‘001 is in the early stages, with limited data and much work to be done, our KOLs believe this prodrug has the potential to be a best-in-class drug with: 1) superior improvements in PVR and 6MWD; 2) relatively favorable safety/tolerability profile; 3) Convenience of oral (vs. injectable) form. These attributes could meaningfully improve patient compliance and expand prescriber adoption, particularly in markets where ease of use and safety are high. Assuming favorable pivotal trial results, we believe IKT-001 is well-positioned to gain meaningful share and reshape the treatment paradigm for PAH and potentially other types of PH…Given the potential for widespread use in the >$7B market, we think the risk/reward looks compelling and supports our Buy rating.”
The Bank of America analyst backs his buy rating with a $6 price target, implying a strong 240% upside over the next 12 months. (To view Zemansky’s record, click here)
No one on Wall Street disagrees. IKT’s Strong Buy consensus rating is based solely on Buy recommendations – 4 in total. Considering the average price target is $5.75, one-year upside is expected to be approximately 227%. (look IKT Stock Forecast)
Wave Life Sciences(Western Weiwei)
The second stock on Bank of America’s radar is Wave Life Sciences, an RNA-focused biotech company advancing a new generation of drug candidates through its proprietary PRISM platform. By combining deep genetic insights with innovative chemistry, PRISM provides the company with a versatile toolkit of RNA targeting patterns. Wave’s mission is to develop precision therapies for gene-driven, difficult-to-treat diseases where current options are inadequate.
In line with this strategy, the company has advanced several projects into human clinical trials. These include WVE-006, developed using RNA gene editing, and WVE-007, a lead drug candidate utilizing RNAi technology.
WVE-007 is now emerging as an early proof point for this strategy. In December, the company reported results from the Phase 1 INLIGHT trial evaluating WVE-007 for the treatment of obesity. A single 240 mg subcutaneous dose significantly reduced visceral and total body fat while increasing lean body mass, an encouraging result in a highly competitive and rapidly evolving market. Based on these findings, Wave plans to initiate additional obesity studies this year, including a phase 2a multi-dose trial.
Meanwhile, Wave’s RNA editing platform is developing WVE-006, a first-in-class GalNAc-conjugated RNA editing oligonucleotide designed to correct the potentially pathogenic SERPINA1 Z allele mutation in alpha-1 antitrypsin deficiency (AATD). The goal is to restore circulating wild-type alpha-1 antitrypsin (M-AAT) while reducing toxic Z-AAT accumulation in lung and liver tissue. WVE-006 is currently being evaluated in the Phase 1b/2a open-label RestorAATion-2 trial, which includes single-ascending-dose and multiple-ascending-dose cohorts in individuals with homozygous Pi*ZZ genotypes. Safety and tolerability data to date are good, with most adverse events reported to be mild to moderate.
This cutting-edge biotech backed by a differentiated clinical pipeline caught the attention of Bank of America analyst Alec Stranahan, who sees significant upside, particularly in the company’s obesity program.
“Wave’s obesity program (WVE-007) is a core upside driver in our framework, accounting for 56% of our PO, with differentiation coming from targeting INHBE, a gene that controls lipolysis. Early clinical data has demonstrated solid fat loss while maintaining lean body mass. We believe exploring 2026 readouts with longer follow-up and higher doses should further close the weight loss gap and define the competitive landscape. While obesity development is intense (including other INHBE therapies), but we believe upcoming readouts will support differentiation. We model 0.8% peak penetration as monotherapy and 2% as combination/maintenance therapy, resulting in potential unadjusted peak sales of over $11 billion… For WVE-006, we believe AAT production looks stable and has the potential to improve with multi-dose data,” Stranahan noted.
Stranahan subsequently rated WVE stock a “buy” with a $38 price target, implying about 182% upside next year. (To view Stranahan’s record, click here)
The broader analyst community is also leaning bullish. The stock has a Strong Buy consensus based on 15 recent positive reviews, with the stock changing hands at $13.49, with an average price target of $32.57, and Wall Street sees upside of approximately 141% in the year ahead. (look WVE Stock Forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. This content is for reference only. It is important to do your own analysis before making any investment.
