Bullish on Biotech: Why Oppenheimer's Equity Stance Holds in Volatile Markets

In a world where geopolitical tensions and policy uncertainties loom large, Oppenheimer's recent bullish call on equities stands out as a contrarian yet data-driven strategy. While concerns over tariffs, fiscal policy, and global conflicts persist, the firm argues that sector-specific catalysts, robust earnings momentum, and innovation-driven growth justify maintaining equity exposure. Nowhere is this thesis more compelling than in the biotechnology sector, where companies like Quince Therapeutics (QNCX) and Sarepta Therapeutics (SRPT) are positioning themselves as key drivers of upside potential—even amid market volatility.

The Bull Case for Equities: A Foundation of Strength

Oppenheimer's optimism hinges on strong earnings growth and resilient economic data. The S&P 500's Q1 2025 earnings surged 12.5% year-over-year, with tech, healthcare, and communications sectors leading the charge. This outperformance, coupled with moderating inflation and robust job creation, has created a “workout market” where patient investors can capitalize on long-term trends.

The firm's preference for cyclical sectors—including tech, industrials, and financials—aligns with its belief in a secular bull market fueled by technological innovation. Yet, within this landscape, biotech stands out as a high-conviction theme, offering both growth and defensive characteristics.

Biotech as a Catalyst for Equity Resilience

Biotechnology stocks are often seen as high-risk investments, but Oppenheimer's analysis highlights how companies with clear clinical milestones and breakthrough therapies can mitigate broader market risks. Two names exemplify this:

1. Quince Therapeutics (QNCX): The EDSP Opportunity

QNCX's lead asset, eDSP, is a proprietary formulation of dexamethasone (a steroid used to treat inflammation) delivered via its AIDE technology. This innovation addresses a critical flaw of traditional steroids: severe side effects like Cushing's syndrome. By reducing toxicity, eDSP could become a first-in-class treatment for conditions such as chronic obstructive pulmonary disease (COPD) and idiopathic pulmonary fibrosis (IPF).

• Clinical Catalyst: Phase 3 results for eDSP in IPF are expected by Q4 2025. If successful, the drug could capture a $200 million annual U.S. market share by 2031.
• Valuation Upside: Oppenheimer's $840% upside target implies a potential price surge to $20+ from its current ~$2.10 level.
• Risk Mitigation: Biotech's R&D-heavy model benefits from the Fed's accommodative stance, while eDSP's unique mechanism shields it from geopolitical trade disputes.

2. Sarepta Therapeutics (SRPT): Navigating Headwinds with Pipeline Depth

SRPT's gene therapy Elevidys (formerly SRP-9001) treats Duchenne muscular dystrophy (DMD), a rare and fatal disease. Despite a temporary clinical hold in May 2025 due to a patient fatality, Oppenheimer remains bullish:
- Therapeutic Uniqueness: Elevidys is the only DMD treatment approved for patients aged 4 and older, with a $600 million annual revenue potential in the U.S. alone.
- Pipeline Diversification: SRPT's preclinical programs in ALS and Huntington's disease add layers of resilience.
- Valuation: At its current $25/share, SRPT trades at a 40% discount to its $37.50 price target, reflecting market skepticism about regulatory risks.

Why These Biotechs Defy the Bear Narrative

Critics of equities cite risks like tariff wars and fiscal gridlock, but biotech's high-growth profile and regulatory tailwinds offer counterbalance:
1. Clinical Milestones as Volatility Anchors: Phase 3 readouts (QNCX) and regulatory approvals (SRPT) create binary events that can stabilize or revalue stocks, even as macro risks linger.
2. Global Demand Insulation: Biotech therapies address unmet medical needs, making them less sensitive to trade policies or supply chain disruptions.
3. Alignment with Secular Trends: Both companies benefit from Oppenheimer's broader thesis: tech-driven innovation (eDSP's drug delivery tech, SRPT's gene therapy) and aging populations (rising demand for chronic disease treatments).

Investment Strategy: Diversify, but Focus on Catalysts

Oppenheimer's recommendation to overweight U.S. equities is not a blanket call but a strategic allocation to quality growth stocks with visible catalysts. For biotech investors:
- Buy QNCX ahead of the Q4 Phase 3 results. The stock's low valuation and binary upside make it a “high-conviction” name.
- Hold SRPT through regulatory noise. Its pipeline depth and pricing power in rare diseases justify a long-term stance.
- Balance with Cyclical Plays: Pair these biotechs with Oppenheimer's favored sectors (tech, industrials) to benefit from the broader equity rally.

Conclusion: The Biotech Bull Case

Geopolitical risks are real, but Oppenheimer's analysis shows that selective equity exposure—particularly in high-conviction sectors like biotech—can thrive in turbulent markets. QNCX and SRPT exemplify how innovation, clinical catalysts, and valuation asymmetry can turn macro headwinds into opportunities. For investors willing to look past short-term noise, these names could be the engines of equity returns in 2025—and beyond.

Stay patient, stay diversified, and let the data lead.