Still, the outlook for biotech stocks could improve now , with innovation in new drugs and more merger and acquisition activity driving investor interest. Recently, Wall Street has been zoning in on developments in treatments for Alzheimer's diseases, drugs for weight loss and treatments using gene editing. CNBC Pro screened for biotech stocks that are part of the iShares Biotechnology ETF , searching for names with huge upside from current prices. In January, Piper Sandler initiated research coverage of Karuna with an overweight rating, saying it's "blazing a new trail in Schizophrenia" treatments. The stock was named another top 2023 pick by Piper Sandler, which said Legend has a "best-in-class" treatment for adults with relapsed multiple myeloma, a segment "with demand far outpacing supply."

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