2 Beaten-Down Stocks to Buy on the Dip

While the recent market dip has created bargains, some stocks have sufficiently lagged the market in the past year to warrant that title regardless of what's transpired in 2025. Among them are CRISPR Therapeutics (NASDAQ: CRSP) and Merck (NYSE: MRK), two companies that develop innovative medical therapies.

CRISPR Therapeutics' shares are down by 41% over the trailing-12-month period, while Merck's have declined by 22%. Though both companies have encountered some headwinds, there are good reasons for patient investors to initiate positions, especially at current levels.

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1. CRISPR Therapeutics

It's not hard to figure out why CRISPR Therapeutics, a gene-editing specialist, isn't performing well. Though the company earned approval for Casgevy, which treats a pair of rare blood diseases, in late 2023, it's still not generating much revenue from it. Administering gene-editing therapies is expensive and time-consuming. Furthermore, CRISPR Therapeutics will share the profits generated from Casgevy with Vertex Pharmaceuticals, with which it developed the medicine; Vertex is entitled to 60% of the program profits.

Still, Casgevy is now approved in the U.S., the U.K., and the European Union, in addition to several countries in the Middle East where the market opportunity may be larger than it is in the U.S. The mid-cap CRISPR Therapeutics would have never sought approvals in all those regions -- it's far too costly to do so for a company of this size. Even if it had, it wouldn't have done it that fast. So Casgevy's target market is much bigger than it otherwise would be, thanks to CRISPR Therapeutics' partnership with Vertex.

Although it isn't yet contributing much to CRISPR Therapeutics' results, Casgevy will, eventually. It costs $2.2 million per treatment course, and hardly any approved competing treatments can challenge it. Casgevy is a one-time curative option for two otherwise lifelong diseases that rob patients of years -- or decades -- of average life expectancy, and cause severe hardships and financial burdens to them and their families.

Elsewhere, CRISPR Therapeutics is developing other gene-editing medicines. It's working on a functional cure for type 1 diabetes. Meanwhile its CTX112, being developed to treat B-cell malignancies, has earned the Regenerative Medicine Advanced Therapy designation from the U.S. Food and Drug Administration. This designation is granted to and helps speed up the development of medicines that target serious or life-threatening conditions and have provided promising early evidence of efficacy.

CRISPR Therapeutics has already demonstrated significant innovative abilities. Expect the company to record important clinical wins in the next few years while it ramps up sales from Casgevy. After losing more than 40% of its value over the last 12 months, the stock could generate excellent returns for patient investors.

2. Merck

Merck's best-selling medicine is Keytruda, which has earned dozens of indications worldwide e across many different types of cancer. Last year, an investigational cancer treatment called ivonescimab performed better than Keytruda in a phase 3 clinical trial conducted in China, on patients with non-small cell lung cancer and a PD-L1 protein overexpression -- one of Keytruda's most important markets. Eventual competition from ivonescimab could eat into Keytruda's market share -- and the older medicine will run out of patent exclusivity in 2028.

Last year, Merck generated revenue of $64.2 billion, up 7% compared to 2023, a solid performance for a pharmaceutical giant. Keytruda's sales were $29.5 billion, up 18% year over year; the drug accounted for about 46% of Merck's top line. That's why the market is spooked: Losing Keytruda could be a catastrophe for Merck.

However, the company has long been setting up its post-Keytruda plans. Merck will first extend the medicine's patent life through a subcutaneous formulation. This version of Keytruda should earn indications across many of the original's markets, and generate decent sales well into the 2030s.

Moreover, the company will seek to develop newer, better medicines. Merck signed an agreement with China-based LaNova Medicines to develop LM-299, a cancer medicine in the same category as ivonescimab. Merck also joined the search for an effective weight management medicine through a licensing agreement with Hansoh Pharma for HS-10535, a preclinical GLP-1 candidate. Merck's own newer medicines, like Winrevair, a treatment for pulmonary arterial hypertension (PAH) with a novel mechanism of action, should eventually generate over $1 billion in annual sales. The company has a deep pipeline of its own, too.

Lastly, Merck is a solid dividend stock. The company's forward yield now tops 3.4%, and it has increased its payouts by 80% in the past decade.

Merck's issues are real, but it's encountered similar ones before in its long and storied history and has always come out on top. It seems to have the means to do the same this time. Despite dropping by more than 20% in the past year, the stock is an excellent pick for long-term investors.

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Prosper Junior Bakiny has positions in Vertex Pharmaceuticals. The Motley Fool has positions in and recommends CRISPR Therapeutics, Merck, and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.