Just when it seemed time to throw in the towel, the market pulled through with a win. After April turned out to be the worst month since March 2020, May got off to a more upbeat start as investors hoped the bottom might be in sight.
Whether that is the case or not is yet to be determined, although the only benefit of a bear market is that investors have plenty of opportunities to pick up promising stocks at attractive prices.
But how do you get your hands on the next winner? One way is to follow the example of analysts at banking giants such as Goldman Sachs.
We dove into TipRanks database to learn more about two names that the company’s equity analysts consider ready to take off, even in the current risk environment. These are names Goldman’s stock pickers are seeing rise by at least 70%; they also happen to be ranked as strong buys by analyst consensus. Let’s see why the banking company finds these names so appealing right now.
The Holy Grail for investors may be a multibagger, but for a biotech company it’s getting one of its candidates across the finish line, a feat already achieved by Insmed, a technology-focused company. development of drugs for rare diseases.
In 2018, Insmed won FDA approval for its lung disease drug Arikayce. In 2021, Arikayce generated net sales of $159.5 million in the United States, but also earned $16 million from Japan after its launch in July, while in Europe, Arikayce is now available in Germany, in the Netherlands, Wales and Scotland.
Arikayce could already generate significant revenue, but the pipeline has various other drugs in development.
Recruitment for the Phase 3 ASPEN study testing brensocatib in patients with bronchiectasis is ongoing while the Phase 2 pharmacokinetic/pharmacodynamic study of brensocatib in patients with cystic fibrosis is ongoing; Insmed expects to have a reading of the data from this study early next year. The company is also moving forward with two Phase 2 studies of treprostinil palmitil (TPIP) inhalation powder, indicated to treat patients with pulmonary arterial hypertension (PAH).
It’s a combination of attractive valuation, commercial viability, a strong pipeline and additional opportunity that has Goldman Sachs’ Andrea Tan in a bullish mood.
“With INSM trading close to its trading base (~$20/share), we view the name as attractive at current levels, noting strong trade execution boosted by favorable COVID and idiosyncratic tailwinds for sales of Arikayce for FY22 (30%+ YoY growth) and pipeline catalysts to serve as inflection points and unlock pipeline value Additionally, INSM’s fourth pillar dedicated to translational medicine will be unveiled at the next R&D day in 2H22 where the target of 1 IND/year (the first in gene therapy by YE22) is designed to ensure long-term growth in multiple indications,” Tan wrote.
All of the above convinced Tan to rate INSM as a buy. Along with the call, she set a price target of $56, suggesting a high upside potential of 145%. (To see Tan’s track record, Click here)
Overall, the street is unanimously on board here; the stock has garnered 7 analyst reviews over the past 3 months, and all are positive, making the consensus a strong buy. There is also a medium bullish target; at $50, the figure implies that the stock will appreciate by around 119% over the coming year. (See INSM stock forecast on TipRanks)
2organic seventies (TSVT)
We will stay in the biotech district for the next stock. 2seventy bio derives its nickname from the “maximum speed of translating human thought into action”, which occurs at 270 miles per hour. The cell and gene therapy company aims to get ahead of cancer and was created after bluebird bio spun off its serious genetic diseases business from its oncology segment.
The company has a commercial asset, Abecma, which was developed in partnership with Bristol Myers. The drug gained FDA approval in March 2021, making it the first cell-based gene therapy approved for the treatment of multiple myeloma.
Bristol Myers reported that Abecma’s revenue reached $158 million last year, and the two companies shared all profits and losses related to the drug in the United States equally. 2seventy expects Abecma’s total U.S. revenue to be between $250 million and $300 million in 2022, with the company recently saying it is on track to hit the “high end” , thanks to a large backlog of patients and high demand.
The company’s pipeline has 5 preclinical study programs enabling IND, but two other assets have already moved into clinical studies; bbT369 is a dual-target CAR T therapy (CD20 and CD79a) in a Phase 1 study indicated for the treatment of non-Hodgkin’s B-cell lymphoma (NHL) and SC-DARIC33, a potentially first-in-class investigational CD33 targeting CAR T for the treatment for acute myeloid leukemia is also in phase 1 testing. Initial data is expected in 2H22 and proof-of-concept (PoC) clinical data should be available in 2023.
Goldman Sachs’ Salveen Richter is “constructive” on these new clinical-stage assets and is optimistic about Abecma’s business prospects.
“In our view, TSVT’s fundamental value proposition is supported by Abecma, which represents a core business of approximately $12/share, and is focused on the pipeline where we note innovative science combining multiple technologies. Abecma demonstrated a promising early launch where demand exceeded supply. We are monitoring industry-wide supply constraints for lentiviral vectors, but consider the 2022 U.S. sales forecast of $250-300 million achievable,” Richter noted.
To that end, Richter values TSVT shares as a buy and has a price target of $26 for the shares. The implication for investors? Increase of ~72%. (To see Richter’s list, Click here)
Two other analysts recently responded to TSVT’s criticisms and they support Richter’s positive stance, giving the stock a consensus Strong Buy rating. Their price projections are even more bullish than the Goldman analyst allows; at $34.67, the figure suggests the stock will rise 129% over the one-year period. (See TSVT stock forecast on TipRanks)
To find great ideas for stocks trading at attractive valuations, visit TipRanks’ Best stocks to buya recently launched tool that brings together all information about TipRanks stocks.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The Content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.