How do you define a stock market opportunity? Is it a windfall, a piece of luck, or the result of careful planning, a strategy to make the most of any opening? The savvy investor seeks out the latter, looking for stocks that offer inducements to entry, be it a high upside or a depressed share price or a recent positive analyst review – or better yet, a combination of all three.
So there’s a profile. We’ve used the TipRanks database to look up three stocks that fit it – stocks with Strong Buy consensus ratings, plenty of upside potential, and recent thumbs up from the analyst corps. And, while these stocks have plenty of positives in the profile, each one has also seen steep share price losses in recent weeks. Let’s take a closer look.
Axsome Therapeutics (AXSM)
We’ll start with Axsome, a biopharma research company working on new medication therapies for diseases of the central nervous system (CNS). Axsome’s target conditions currently have limited treatment options – and also have a deep potential patient base. The company is researching medications with ‘novel mechanisms of action’ as a way to transform the approach to CNS treatment. The company is investigating treatments for a varied range of conditions, from Alzheimer’s, to fibromyalgia, to severe migraines, to depression.
Axsome currently has four drug candidate in the development pipeline. The leading candidate, AXS-05, is a multimodal treatment, developed to treat major depressive disorder, Alzheimer’s-related agitation, and smoking cessation. The depressive disorder track, for which AXS-05 has a breakthrough therapy designation, is farthest along – the New Drug Application has been submitted, and the FDA has given a PDUFA target date of August 22 this year. If approved, the company plans to launch commercially in 4Q21. On the Alzheimer’s track, AXS-05 is currently undergoing the Phase 3, double-blind ACCORD study. Enrollment is currently ongoing.
The next big update for the company is planned NDA submission for AXS-14, a new treatment for fibromyalgia. This drug candidate has competed two trials, a Phase 2 with 267 patients and a Phase 3 with 1,122 patients, both with positive results. Data from the trials will be included in the NDA submission, which is planned for Q4 of 2022.
Finally, Axsome has AXS-7 as a migraine treatment. This candidate has demonstrated effective pain relief in patients within two hours of dosing, and has a potential patient base of 37 million. The company has an NDA in preparation for this drug candidate, and hopes for approval next year.
The pipeline is the key point here, and Berenberg’s Esther Hong bases her Buy rating on the potential of AXS-05 as a treatment for major depressive disorder.
“We are bullish on the prospects and see a potential commercial launch in Q4 2021. Second, the company expects to submit a new drug application (NDA) with the FDA this quarter for a second product (AXS-07 for the treatment of migraine). Approval could come in 2022. We see opportunity for significant price appreciation over the remainder of the year driven by these key upcoming catalysts with longer-term upside from a robust pipeline,” Hong opined.
The analyst added, “We are bullish on the prospects for AXS-05 in MDD due to 1) its robust efficacy in treating depression as a result of its novel mechanism of action [MOA]; 2) the speed of efficacy compared to traditional antidepressants; and 3) a superior safety profile compared to other NMDA antagonist antidepressants…”
Hong puts a $112 price target on the stock, suggesting an upside of 123% for the year ahead. (To watch Hong’s track record, click here)
With a unanimous Strong Buy consensus rating, based on 8 recent reviews, it’s clear that Wall Street agrees with Hong on the potential of this stock. The shares fell in the past year, mainly due to regulator hurdles, but in the Street’s estimation, that has opened up an opportunity. The stock is selling for $50.27 and has an average target of $135.33, indicating room for ~170% upside potential this year. (See AXSM stock analysis on TipRanks)
Theravance Biopharma (TBPH)
For the next stock, we’ll look at another biotech. Theravance has royalty rights on several approved products which are on the market, including Yupelri for chronic obstructive pulmonary disease (COPD), a long-term and terminal disease of the lungs. Yupelri is an inhalant drug, used once daily. The company also has an active development pipeline, with drug candidates under investigation for hypotension, ulcerative colitis and Crohn’s disease, and other inflammatory lung diseases.
In late June, Theravance released negative data on a Phase 2 study of nezulcitinib, a respiratory medication that showed potential as a treatment for COVID-19. The study showed a favorable trend when compared to placebo, but did not meet the required endpoint. Nezulcitinib remains in Phase 2 trials has a candidate for treatment of other inflammatory lung diseases.
After the nezulcitinib study results were released, Theravance also announced a public offering of ordinary shares. This double whammy – negative study results and stock dilution – pushed the shares down in late June and July.
On positive notes, the company expects to release top-line data from its Phase 3 study of ampreloxetine, a medication for neurogenic orthostatic hypotension during Q3 – and data from the Phase 2 study of izencitinib for Crohn’s disease is expected in 4Q21 or 1Q22.
Turing to revenue, Theravance received $12.9 million from its 35% share in Yupelri during Q1 this year, and Trelegy, an asthma medication from GSK in which Theravance has tiered royalty rights of 5.5% to 8.5%, earned $341 million Q1. The company expects similar results in the Q2 results.
JPMorgan analyst Anupam Rama covers Theravance, and sees the pipeline – and the Yupelri/Trelegy income – as the key points.
“…we would note that 3Q is catalyst rich, which includes top-line data for izencitinib in ulcerative colitis (UC) and top-line phase 3 data for ampreloxetine in neurogenic orthostatic hypotension (NOH). Additionally, top-line phase 2 izencitinib data in Crohn’s disease are expected in 4Q21/1Q22. Importantly, there are no definitive Street expectations for the aforementioned catalysts, which will be important to monitor in the coming weeks/months,” Rama noted.
The analyst summed up, “Our Overweight rating is based on near-term pipeline optionality and current valuation levels (TBPH shares trading at the value Yupelri / Trelegy).”
Rama sees a holding pattern here – but a bullish one, as there are those royalty rights. His Overweight (i.e. Buy) rating includes a $30 price target implying an upside of ~136% for the next 12 months. (To watch Rama’s track record, click here)
There aren’t many on the Street betting against TBPH right now. 1 Holds vs 5 Buys result in a Strong Buy consensus rating. The average price target of $29.50 implies upside potential of ~130%. (See TBPH stock analysis on TipRanks)
Las Vegas Sands (LVS)
We’ll wrap up with a change of pace, and look at Las Vegas Sands, the casino and resort company. The company owns 8 resort properties – five in Macao, China, one in Singapore, and two in its home of Las Vegas. Pre-COVID, Vegas Sands saw $27 billion in global revenue for 2019 – but in 2020, that number was only $3.614 billion. While quarterly revenues in 1H21 have remained above $1 billion, they have not yet regained pre-pandemic levels.
In addition, the spread of the Delta variant, and the possibility of a new round of lockdown and travel restrictions, slammed the stock starting in late spring. Shares are down 36% from their mid-March peak. In its Q2 earnings release, management noted that business has still not returned to normal and that LVS continues to run quarterly losses – although revenues have improved from the low point reached in 2Q20.
On positive notes, Sands has been using this relative down time to expand its facilities in Macao, and the company has over $2 billion in unrestricted cash.
Writing from Deutsche Bank, 5-star analyst Carlo Santarelli writes: “We believe investors broadly remain confident in the eventual return to normalcy in both Macau and Singapore, and as such, given the difficulty in identifying the timing of the pivot in sentiment, we remain Buy rated. Our rating is based on our view that; 1) stronger top-line growth trends, 2) growth projects becoming more visible, 3) the concession overhang alleviating, and 4) the eventual return of capital, will all drive investor interest.
Overall, Santarelli looks at LVS as a long-term stock, with current low prices as a buy-in opportunity. His Buy rating is backed by a $73 price target indicating his confidence in a one-year upside of 73%. (To watch Santarelli’s track record, click here)
Most of the Street have not given up on the company just yet, as TipRanks analytics showcase LVS as a Strong Buy. Out of 5 analysts polled in the last 3 months, 4 are bullish on the stock, while only one remains sidelined. With a potential upside of ~47%, the stock’s consensus target price stands at $62. (See LVS stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.