Why the best analysts bet on stocks like Alcon and Upstart
The Alcon logo is seen at the company’s headquarters in Huenenberg, Switzerland, Monday, January 4, 2010.
Peter Frommenwiler | Bloomberg | Getty Images
As the first quarter of 2021 draws to a close, analysts look at stocks in their hedge universes and assess their position for the long term.
Against this backdrop, there are high levels of unemployment and a vaccine rollout that is still in its early stages, with more than two-thirds of adults in the United States not yet receiving a single dose.
In these uncertain times, an approach find actions ready to generate long-term growth is to follow the recommendations of proven analysts.
Using TipRanks Analyst Forecasting Service, which attempts to identify the top performing Wall Street analysts based on pass rate and average return per rating, we checked recent stock picks from these top analysts.
Here are the five favorite stocks of top performing analysts right now.
ALX Oncology is an immuno-oncology company that develops therapies designed to block the CD47 checkpoint pathway for cancer patients.
Despite the recent sale, HC Wainwright analyst Swayampakula Ramakanth reiterated a buy note and a price target $ 100 (upside potential 59%) on March 22.
Ramakanth tells clients that negative investor sentiment is due to an unfavorable reading of the first line of the Phase 3 study of tilsotolimod, an Idera TLR9 agonist. It should be noted that on March 4, ALX Oncology agreed to a joint 50/50 collaboration with Tallac Therapeutics to develop a TLR9 agonist antibody conjugate targeting the alpha signal regulatory protein (SIRPα), SIRPα TRAAC, as cancer treatment, with an IND is expected to be filed by the end of 2022.
“In our opinion, the market has overreacted, as we believe that the two programs use completely different mechanisms of action although both programs use TLR9 agonists and due to the early stage of the program, the enhancement of SIRPα TRAAC has not yet been integrated. ALXO Award. Therefore, we believe that last Friday’s sale creates an attractive entry point for long-term investors, ”commented Ramakanth.
In addition, the analyst emphasizes the fact that ALXO will present the full results for ALX148, its high affinity CD47-binding fusion protein, from phase 1b studies in patients with gastric and gastroesophageal junction (GEJ) cancers and squamous cell carcinoma of the head and neck. neck (HNSCC) in mid-2021 and 2H21, respectively. The therapy is being evaluated in combination with Herceptin by Roche and Cyramza by Eli Lilly in gastric cancers / GEJ HER2 + and Keytruda by Merck in HNSCC.
As the available clinical data are promising, “the updates to the ALX148 data in HNSCC and gastric / GEJ cancers could be short-term catalysts for the stock,” according to Ramakanth. Additionally, Phase 1 data readings for ALX148 in high-risk MDS and AML at 4Q21 and 1Q22, respectively, may reflect additional catalysts, the analyst notes.
Ranked # 117 on TipRanks’ list of top performing analysts, Ramakanth has an average return of 36.3% per rating.
In response to Semtech’s quarterback beat and raise, Rick Schafer of Oppenheimer praised the semiconductor company. To that end, the five-star analyst has maintained a buy rating as well as a price target of $ 80, which places the upside potential at 23%.
Looking at the print details, sales of $ 165 million and EPS of $ 0.51 exceeded consensus estimates of $ 158 million and $ 0.48. Most notable, however, is that LoRa finished 2020 at $ 88 million, up from $ 74 million, with the company “winning keynotes with Amazon Sidewalk and AWS IoT Core network (combined $ 100 million opportunity) “.
“We see these victories further validating LoRa and its ecosystem. TCMS also announced a partnership with Webee in conjunction with the results. The Webee agreement allows customers to easily connect LoRa devices to MSFT Azure. LoRa cloud services start contributing this year (weighted 2H) and management expects to gain more than 20 cloud customers through EOY, ”noted Schafer.
Schafer also points out that the rise in adoption as public and private operators LoRa rose to 150, rising to 165 by the end of the year. In addition to LoRa, the analyst argues that 5G and DC will support “accelerating growth.”
“LoRa’s cloud services are poised to generate future benchmark gains, in our opinion. LoRa remains the primary growth / uptick driver for SMTC with a potential CAGR of 40% and above over 5 years. We remain buyers at long term, ”Schafer said.
With a current pass rate of 76% and an average return of 22.3% per rating, Schafer ranks 57th in TipRanks’ best analyst rankings.
Content creator and streaming company CuriosityStream just reported strong subscriber numbers for the 4Q20. As of December 31, 2020, the company had 15 million total subscribers, up 50% year-over-year.
It should be noted that 75% of CURI ‘s DTC subscribers pay $ 20 for an annual plan, and the churn rate has declined 25% year over year to reach an average lifespan of 30 months. In addition, the launch of discovery + January 4 of this year had no negative impact on CURI’s subscriber growth in the first quarter.
Needham analyst Laura Martin was impressed, with the top analyst leaving her buy rating and $ 25 price target as is. This price target suggests an upside potential of 79%.
“What we love most about CURI is that it’s a streaming company, where the bulk of its revenue comes from companies around the world on 5-year contracts. investors visibility and downside protection For example, CURI has stated that 80% of its annual revenue forecast for 2021 is contracted and highly predictable, ”Martin explained.
As for the total number of hours in the CURI library, around 30% are fully owned by CURI while 70% are licensed under three to five year contract terms, with it being prepared to maintain this mix. . According to management, there has been no upward pressure on the cost of rights for the licensed content.
The company also entered into two sponsorship deals in the fourth quarter, reflecting a new source of revenue, says Martin, with the analyst estimating those deals will add $ 5 million to revenue in 2021 and $ 7-10 million. income in 2022.
Landing among the top 65 analysts tracked by TipRanks, Martin achieved a 64% success rate and an average return of 32% per rating.
After a major beat in 4Q20, Bank of America Securities analyst Nat Schindler handed over Reached an upgrade, with the rating changing from Neutral to Buy. Further proving his optimism, he increased the price target from $ 57 to $ 135. This new target puts the upside potential at 13%.
Easily exceeding street expectations, revenue for the quarter was $ 84.4 million, compared to $ 79 million estimated by consensus. EBITDA of $ 15.5 million exceeded estimate of $ 11.1 million. Although Upstart posted EPS of $ 0.00, analysts initially called for a loss of $ 0.07.
This impressive performance is explained by a weaker-than-expected impact of Credit Karma’s November adjustments, a high lending volume of 123,396 loans, up 57% year-over-year, and a higher conversion rate. amounted to 17.4%, compared to 14.9% in 4Q19.
“We are encouraged by Reachedthe ability to deliver 39% growth on tough comps as an ongoing validation of Upstart’s value proposition to banking partners and consumers. We believe Upstart could see longer-term growth from recurring borrowers and comments on the call suggest a strong pipeline of banking partners going forward, ”said Schindler.
Since the company debuted on the public market in December, it has signed three new banks, bringing the total number of partner banks to 15. In addition, the company has just revealed that it is preparing to acquire Prodigy, automotive retail software publisher.
“Although we do not expect a significant contribution to revenues in 2021, we see the acquisition of Prodigy as a major step in Upstart’s expansion into the adjacent TAM of auto loans (estimated at $ 626 billion),” Schindler commented.
Going forward, management estimates that FY21’s revenue will amount to $ 500 million, compared to the consensus estimate of $ 427 million.
According to TipRanks, Schindler has a success rate of 59% and an average return of 22% per note.
In a recent research note, BTIG analyst Ryan Zimmerman writes that multiple product initiatives, a boost to the recovery and clarity on long-term goals should help investors “see 20/20 in 2021 “, in regards to Alcon.
With that in mind, the five-star analyst upgraded the rating to Buy, with the analyst also assigning a price target of $ 78 (upside potential of 13%) to the eye care supplier.
Zimmerman acknowledges the fact that since the company originated from Novartis in 2019, stocks underperformed the S&P 500 even though it enjoyed a “healthy valuation premium and exceeded expectations in three of the last four quarters.” Some investors have expressed concern about ALS’s ability to increase operating margins, with the pandemic also hampering the ophthalmic space more than other areas of medical technology.
To this Zimmerman replied: “However, ALC enters FY21 with a litany of top engines and benefits from the recovery momentum (evident in our surveys and KOL calls), and we expect mgmt.to to “ put to bed ” questions about long-term goals on Capital Markets Day. “
Although the analyst realizes that operating margins are a cause for concern, Zimmerman maintains that “it is not a question of whether ALC achieves a low operating margin-20, but when; we believe the difference is a year or more (due to COVID) is not prohibitive to hold shares that may continue greater than market growth, which begins to generate operational leverage in the years to come. “
Looking at the main growth drivers in 2021, the analyst expects patients to return to ophthalmologists and optometry visits, as more people seek optical solutions to counter the negative effects of the increased screen time, cataract recovery and refractive surgery volumes, adoption of AT-IOLs continues and hospital budgets are returning to surgical equipment.
With a 62% pass rate and an average return of 34.7% per note, Zimmerman is ranked # 110 on the TipRanks list.