Citi Highlights SMid Biotechs as Strong Alternatives to Large-Cap Stocks

Expert Insights on Small and Mid-Cap Biotech Investments / Reuters

Citi has recently broadened its biopharmaceutical research scope by initiating coverage on seven small and mid-cap biotechnology companies, emphasizing their potential as compelling alternatives to large-cap pharmaceutical giants during a period of healthcare policy uncertainty. In a strategic move, Citi suggests that investors seeking diversification from volatile tech, artificial intelligence, and consumer sectors consider these SMid biotechs, which offer significant growth opportunities driven by innovative pipelines and upcoming clinical milestones. This comprehensive coverage underscores Citi’s optimism about the sector’s resilience and its role in a balanced investment strategy amid economic and regulatory fluctuations.

Citi’s analysts have assigned Buy ratings to several standout SMid biotech stocks, providing detailed price targets that reflect their confidence in future performance. For 89bio (NASDAQ:ETNB), a Buy rating comes with a $25 price target, signaling strong growth potential from its current trading price of approximately $8.35, as sourced from Yahoo Finance on March 13, 2025. Apogee Therapeutics (NASDAQ:APGE) also earns a Buy rating with an ambitious $95 target, far exceeding its current value of $39.38, highlighting its promising research into unmet medical needs. BioNTech (NASDAQ:BNTX), known for its mRNA technology, secures a Buy rating with a $145 target against its current $99.83 price, bolstered by anticipated clinical data releases. Kiniksa Pharmaceuticals (NASDAQ:KNSA) and Kymera Therapeutics (NASDAQ:KYMR) round out the Buy recommendations with targets of $40 and $52, respectively, compared to current prices of $22.53 and $34.18. In contrast, Citi takes a bearish stance on PTC Therapeutics (NASDAQ:PTCT), issuing a Sell rating with a $50 target despite its current price of $53.71, while Moderna (NASDAQ:MRNA) receives a Neutral rating with a $40 target, closely aligned with its $35.92 market value. Additionally, Avidity Biosciences, though not detailed with a current price in this specific report, earns a Buy rating with a $70 target, reflecting Citi’s high expectations for its Duchenne muscular dystrophy program.

The brokerage advocates a “barbell” investment approach, blending exposure to high-growth large-cap biotechs like Eli Lilly and Vertex Pharmaceuticals with these catalyst-rich SMid biotech stocks. This strategy gains relevance as SMid biotech sentiment faces unexpected headwinds in early 2025, driven by investor concerns over tariffs, DOGE regulatory oversight, and broader macroeconomic challenges. Despite these pressures, Citi remains optimistic, forecasting a potential resurgence in capital markets activity by the second half of 2025. This outlook is supported by early-year merger and acquisition trends, with 12 deals already totaling roughly $20 billion, suggesting a dynamic environment that could propel SMid biotech valuations higher. For investors searching for small and mid-cap biotech investment opportunities, Citi’s coverage offers a roadmap to navigate this volatile yet promising sector.

A deeper dive into the covered companies reveals a slate of critical clinical and regulatory milestones poised to shape their trajectories. BioNTech anticipates phase 1/2a data for its BNT323 candidate by year-end 2025, a development that could pave the way for regulatory submissions in 2025 or 2026, enhancing its appeal for biotech stock analysis enthusiasts. Moderna’s phase 3 study for its cytomegalovirus vaccine, mRNA-1647, is expected to deliver final efficacy results by late 2025, a pivotal moment that could influence its stock’s modest upside potential given Citi’s cautious Neutral stance. Avidity Biosciences plans a Biologics License Application submission for del-zota in Duchenne muscular dystrophy by late 2025, positioning it as a key player in rare disease treatments. Meanwhile, 89bio’s phase 3 data for pegozafermin, targeting metabolic dysfunction-associated steatohepatitis (MASH), is slated for 2027, offering a longer-term catalyst for investors eyeing biotech stocks with high growth potential. Apogee Therapeutics and Kymera Therapeutics both expect mid to late-stage clinical trial data in 2025, further solidifying their status as Citi’s preferred SMid biotech picks due to their focus on innovative platforms addressing significant medical gaps.

Citi’s nuanced perspective also highlights challenges and risks within the sector. For instance, its cautious outlook on Moderna stems from policy volatility surrounding vaccines and the company’s near-term dependence on its respiratory vaccine franchise, factors that could temper enthusiasm for Moderna stock price predictions in 2025. Similarly, PTC Therapeutics’ Sell rating reflects concerns over its valuation and pipeline uncertainties, making it a less favorable option among the SMid biotech investment trends Citi explores. However, the broader narrative remains positive, with Citi emphasizing the sector’s ability to rebound and capitalize on increased M&A activity. The bank’s analysts point to Apogee, Avidity, and Kymera as top SMid biotech stocks to watch, citing their differentiated approaches and potential to deliver outsized returns in a recovering market.

For those researching biotech industry trends in 2025, Citi’s coverage provides actionable insights grounded in current market data and forward-looking projections. The significant upside potential in stocks like 89bio, Apogee, and BioNTech, with price targets well above their March 13, 2025, levels, underscores the growth opportunities available. Investors can compare these targets to real-time prices: ETNB at $8.35 versus $25, APGE at $39.38 versus $95, and BNTX at $99.83 versus $145, illustrating the gap Citi expects these companies to bridge through clinical success and market momentum. Meanwhile, the anticipated catalysts, from BioNTech’s near-term data to 89bio’s longer-term MASH results, offer a timeline for monitoring progress and adjusting investment strategies accordingly. Citi’s initiation of coverage not only spotlights these seven SMid biotechs but also reinforces their role as vital components in a diversified portfolio, appealing to those seeking alternatives to traditional large-cap pharmaceutical investments during uncertain times.