Buy these 2 stocks before they go above 60%, analyst says
We are living in an interesting time, there is no doubt about it. The COVID crisis is receding, the economic reopening is proceeding at a steady pace – but there are inflationary concerns. The Biden administration has embarked on a heavy spending program, including generous extended unemployment benefits – which in some cases can exceed wages. As a result, the labor market is apparently stuck, operating at low speed and raising fears that the recovery is accelerating.
From a macro perspective, Patrick Spencer, vice president of equities at Baird, is bullish on equities and sees a positive long-term outlook on the jobs front.
“The S&P earnings return… for the next two years you get a 5% earnings return… and you get 1.5% in bonds. So stocks are still the only place to be… We will see leadership shift from value stocks – cyclical stocks – to growth towards the end of this year, ”Spencer said.
Turning his attention to the employment situation, Spencer acknowledges that the high benefits can keep workers at home, but adds that “… COVID support ends in September, and at that point … this will change, and you’re going to get these people back into the workforce.
Turning Spencer’s perspectives into concrete recommendations, Baird analyst Joel Beatty is hammering the table on two actions that seem particularly compelling. According to the analyst, each name is set to jump more than 60% in the next 12 months. Using the TipRanks database, we found that both tickers also received approval from analysts at other companies.
Atreca, Inc. (BCEL)
The first of Beatty’s picks we’re looking at, Atreca, is an early-stage biopharmaceutical research company that focuses on oncology immunotherapies, that is, the development of new drugs that will boost the patient’s immune system to attack tumor cells and tissues. Atreca uses proprietary technology to profile the patient’s immune response, identifying the antibodies and T cell receptors that are the keys to successful treatment.
Atreca has several pipeline projects in development, the majority of which are still in the preclinical phase. The company’s lead candidate, ATRC-101, is currently in a Phase 1 study, with 20 patients enrolled, evaluating the drug against several different solid malignant tumors. The company reported that all patients completed the three-week dose-limiting toxicity assessment period with no adverse effects. Atreca is looking to recruit an additional patient cohort to evaluate a higher dose and plans to release the initial summary data in July this year.
In her coverage of Atreca, Beatty writes: “… we see a favorable risk / reward ratio as the first clinical data approach in July for ATRC-101 in solid tumors. Although we consider the reading to be high risk, we believe the downside is limited due to 1) the recently announced pipeline agent targeting EphA2 (a target that was recently validated by Bicycle Therapeutics), 2) the partnership with Xencor, and 3) the relatively low enterprise value of around $ 100 million implied by the current share price. “
The analyst added: “We believe that Atreca’s unique antibody library has the potential to support a robust pipeline with multiple mechanisms (T cell activators, directed destruction and conjugate toxins)…”
To that end, Beatty sets a price target of $ 27 on this stock, suggesting a sharp rise of 203% for the coming year. Unsurprisingly, the analyst attributes BCEL to an outperformance (ie a buy). (To look at Beatty’s record, Click here)
It’s not often that analysts all agree on a stock, so when it does, take note. BCEL’s strong buy consensus rating is based on 4 unanimous purchases. The average stock price target of $ 29 suggests a rate of 225% and a change from the current stock price of $ 8.91. (See the analysis of BCEL shares on TipRanks)
Syndax Pharmaceuticals (SNDX)
The second Beatty pick we’re looking at is Syndax, another biopharmaceutical company. This research-based company is working on combination therapies for multiple cancer indications. The company’s pipeline includes two main drug candidates, axatilimab and SNDX-5613.
Syndax has two ongoing clinical trial programs. AGAVE 201 is a phase 2 trial of axatilimab, testing the drug as a treatment for patients with “chronic active graft-versus-host disease, relapsing or refractory”. Axatilimab is a monoclonal antibody that works by blocking the colony stimulating factor 1 receptor (CSF-1). The study tests three different dosage levels. The results of previous tests will be released later this year; the results of the AGAVE study are expected to be published in 2023. Axatilimab was granted orphan drug designation by the FDA earlier this year.
The second clinical trial involves SNDX-5613. This trial, AUGMENT 101, is a phase 1 study, testing the leukemia drug candidate MLLr. In preclinical testing, the drug blocked the menin-MLL1 interaction, resulting in tumor cell death. Initial data from the AUGMENT 101 study showed an overall response rate of 48% in patients.
Beatty sees three positive factors for Syndax going forward, including: “1)… the potential for success of SNDX-5613 in NPM1 patients is underestimated, 2) the company appears to be largely or entirely funded by data from registration for SNDX-5613 and axatilimab in 2023, and 3) we see potential for business development, leveraging SNDX’s business development and clinical development strengths.
Consistent with these bullish factors, Beatty is pricing the stock as an outperformance (i.e. a buy), and his price target of $ 31 implies a 65% 12-month hike. (To look at Beatty’s record, Click here)
Overall, SNDX received 5 recent analyst reviews, breaking down to 4 buys versus just 1 hold and making the analyst consensus rating a strong buy. The 12-month average price target stands at $ 27.40, marking a potential upside of around 46% from current levels. (See SNDX stock analysis on TipRanks)
To find great ideas for biotech stocks that trade at attractive valuations, visit TipRanks Best Stocks to Buy, a recently launched tool that brings together all the information about TipRanks stocks.
Disclaimer: The opinions expressed in this article are solely those of the analyst presented. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.