Poor quality of recommendations and price targets in small and midcap biotech research is caused in large part by sell-side research prevalence. The well-known sell-side incentives result in many firms publishing highly optimistic research which is not historically accurate.

The analysis covers a specific investable universe of 120 US biotech companies, focusing on pre revenue biotechs valued between $100 million and $1.5 billion. All firms’ recommendations were loss-generating, averaging -62.1% performance, except for Sadif Investment Analytics (buy-side) , which stood out as an outlier at 71.3%, and the only profitable firm. Top-performing individual analysts included Andrea Newkirk (+123%), Kyle Mikson (71%), Leonid Timashev (22%). Out of 225 analysts covering the space, these were the only three profitable individuals.

This highlights a need for more unbiased research within the space.

This presentation outlines methodology behind our results.