BioXCel Therapeutics (NASDAQ:BTAI) A Hot Buy That Confuses Analysts

A lot of people have been following the healthcare market these days, if for no other reason than they now have a deeply personal connection to it thanks to Covid-19. But healthcare is more than one disease, as many hospitals discovered during the early days when few procedures were allowed to take place. One big new area for healthcare is the use of artificial intelligence (AI), and BioXCel Therapeutics (NASDAQ:BTAI) is a growing force within this growing market. It's just added a new voice of analyst support to its roster, and there's a growing body of evidence that makes it clear this is an increasingly hot buy.

What A Difference Six Months Makes

Six months ago, BioXCel, according to our own research, had just four ratings out on it. The fact that they were all “buy” ratings certainly made up for the lack of numbers; it's hard to argue with unanimity.  Yet with just four voices kicking in, credibility did strain a bit. However, just 90 days later, the stock picked up two new analysts, and each said the same as the first four: buy. Now, another 90 days have passed, and a seventh analyst has come on board.

The latest word from BidaskClub not only says “buy”, but has gone all the way to “strong buy.” What's more, the analysts suggesting that investors buy into BioXCel are also improving their outlook on the stock. For example, Bank of America boosted its price target on the company from $53 to $63. Just a few weeks ago, Guggenheim put its price target up from $101 to $122.

The price target action hasn't been all positive, though; HC Wainwright dropped its target from $200 to $175, which isn't that bad a drop, but a drop nonetheless. Meanwhile, BMO Capital Markets went from $104 to $95, and Canaccord Genuity went from $120 to $108. Finally, back on September 2, Jefferies Financial Group rolled out its “buy” rating along with an $82 price target.

That's a pretty wide range of ground to cover; in the last six weeks or so we've had five assessments of the target that cover, between them, roughly a $93 range. Go back to July and that range expands to $112.

So What's With the Price Range, Anyway?

We can take two key points away from these reports. One, everyone's pretty sure this is a stock to buy. Two, no one's sure exactly how much to buy it for. The stock currently sells, as of this writing, at $44.27, so virtually every analyst who has an opinion on this stock sees some amount of upside, and a healthy amount of it, too. Some see just a little over half again the current price, while some actually see the stock explode to over three times current levels.

Looking at the last year for the company makes things even harder to pin down. This time last year, the company was stuck in the doldrums, only able to break the two-figure mark just ahead of 2020's opening day at $10.06 per share on December 27. Before that, the last time it had seen $10 was a shade over three months prior on September 23. That's when the explosion to the upside started, an the company actually hit $64.63 on July 22 of 2020.  It very nearly hit $40 back in February, reaching a share price of $39.59, but it gave back a lot of those gains when the coronavirus sell-off event hit. After that panic, though, the company started a pretty clearly upward track until about July, when it lost a lot of those gains.

The Nature of the Market

BioXCel has one major advantage going for it right now; it's in a growth market. The market for AI in healthcare has been on a fairly upward track ever since someone thought to combine the two. A new report from Sheer Analytics and Insights suggests that the AI in healthcare market is expected to show a compound annual growth rate (CAGR) of 42% for the period studied, 2020 through 2028. This is a market that started out from $6.1 billion in 2019, and now, by 2028, is on track to be worth $170.5 billion.

With that in mind, it's not surprising that analysts consider this a buy. It's also not surprising that analysts can't seem to pin down a proper buy price. How do you price a piece of a market that's expected to grow that fast that quickly? With so many use cases, and so many potential selling points, this could indeed be a major market. Buying in on BioXCel Therapeutics, meanwhile, is a great shot to get a piece of a market that's on track to be a real bell-ringer.