Citigroup Turns to 2 Promising Biotech Stocks
Citigroup initiated coverage on a pair of names with new buy ratings.
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Investors remain much too complacent on myriad fronts, which had ironically led to resiliency in the market despite several headwinds on the economic and geopolitical front.
The yield on the 10-year treasury backed up 87 basis points in Q3, the biggest quarterly move since 1994. The yields on both the 10-year and 30-year treasuries are at their highest points in roughly a quarter century. Oil flow appears that it has greatly improved over the past month through the Gulf region, even as diesel fuel remains at record highs. Higher rates have pushed the “equity risk premium” deeper in discount territory, for one of few times in U.S. history. Despite all this, the S&P VIX Index (VIX) remains trading in the mid-teens, highlighting the lack of fear in the markets.
Given that it is Friday, I will channel some optimism to close out the trading week. Citigroup initiated coverage this week on a couple of biotech names I hold within my portfolio with new buy ratings. Both stocks remain solid covered call opportunities in my view as I continue to mitigate risk in this overbought market. I have highlighted both equities on these pages, and this column will put them in the spotlight again.
Nuvation Bio (NUVB) was the first equity that received some love from Citigroup on Thursday as the shares garnered a Buy rating and $12 price target, just over twice the shares current trading level. Citi’s analyst is quite encouraged by the initial rollout of the company’s flagship tyrosine kinase inhibitor known by its brand name Ibtrozi. This is one of two FDA approved products Nuvation has on the market. It was approved in 2025 to treat a type of non-small cell lung cancer with certain mutations.
Citi’s analyst notes that Ibtrozi has potentially a best-in-class efficacy and safety profile. Of note, the therapy posted sales of $23.2 million in Q2. This was a subsequential 25% rise over Q1’s revenues. Citi’s analyst believes the drug has $1.1 billion in peak sales potential, and the FDA approved a supplemental new drug application for Ibtrozi in mid-September. Citi also gave a shout out to the company’s lead asset in its pipeline, safusidenib. This candidate is in mid-stage development and received a Fast Track designation from the FDA in late August for IDH1-mutant glioma. The stock has an approximate $2 billion market capitalization and has accumulated over $600 million in net cash on its balance sheet.
The other name Citigroup initiated as a new Buy was Jazz Pharmaceuticals (JAZZ). I gave a shout out to this mid-cap biopharma in the back half of August, so I will keep the update brief. Citi’s analyst believes Ziihera, a bi-specific antibody developed with partners, has a “credible path” as a leading first-line treatment for HER2-positive stomach and esophageal cancer with $2 billion in peak sales by 2032. This could “reset” Jazz’s growth profile. Citigroup slapped a $320 price target on JAZZ, implying 40% upside.
At the time of publication, Jensen was long JAZZ and NUVB.
