Finding value in biotech stocks is increasingly difficult as the sector enjoys a strong run, a biotech investor said on Friday.
"Good drugs and good results will ultimately drive value" as the sector progresses, Les Funtleyder, healthcare portfolio manager at E Squared Asset Management, told CNBC's "Power Lunch."
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Biotech's climb is evident in the iShares Nasdaq Biotechnology ETF, which tracks biotech and pharmaceutical names on the Nasdaq and has floated more than 20 percent higher this year. Biogen popped nearly 10 percent higher on Friday on news that an Alzheimer's drug exceeded expectations in an early test.
The stock has even more upside from where it was trading Friday, around $475 per share, Yaron Werber, senior biotech analyst at Citi Investment Research, told "Power Lunch." As the Alzheimer's drug likely will not reach the market for years, it is important to Biogen's long-term prospects, he said.
When looking at valuations, investors need to consider that low interest rates support risk assets like biotech stocks, Funtleyder said. The sector has popped in the sustained near-zero interest rate environment set by the Federal Reserve.
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Both Funtleyder and Werber noted that companies making drugs in multiple disease areas, such as Biogen, can better sustain their valuations.
"They're not single drug companies. They can support some of the valuation," Funtleyder said.