- The Grade
- Posts
- 2nd September 2024
2nd September 2024
Nick Barber
September 02, 2024
In partnership with
💬 ”Basically, when you get to my age, you'll really measure your success in life by how many of the people you want to have love you actually do love you.” Warren Buffet, who turned 94 this week.
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ANALYST STOCK TIPS
Jakks Pacific, Abercrombie and Take-Two receive bullish calls.
Jakks Pacific was given a Buy rating by Maxim Group. Their target price was $46 - an 87% upside over its current value! The company, known for selling licensed toys from popular franchises like Disney, Sonic the Hedgehog, and Super Mario Bros., has shown resilience by focusing on enduring, well-recognized content rather than short-lived trends and delivering a 6% compound annual growth rate. The analyst note highlighted the company's position in the toy market (worth $28 billion), noting its growth prospects and efficient business model.
Pagaya, a fintech company that uses artificial intelligence to manage institutional investment strategies, focusing on consumer credit and asset management, was given a Buy rating and a price target of $21 by Benchmark (39% higher than its current value). The analysis is based on a recent drop in Pagaya’s share price after its most recent results when it lost $58 million due to marking older loans to fair value. However, Benchmark believes the market has "zeroed in on a single negative data point" and appears to have overlooked the company's "significant progress on multiple fronts," which has created a buying opportunity.
Five Below, the discount retailer, was given a Buy rating by Craig-Hallum. Their price target is $102, an upside of 35%. The company has seen its share price drop 62% in the last six months, but Craig-Hallum is bullish following the company's Q2 results and second-half guidance, which were "better than feared." The firm believes that expectations remain "very low." They note that management has identified the key issues affecting performance and has outlined plans to simplify operations and refocus on the company's core strengths, making the potential upside "too good to ignore."
Abercrombie & Fitch was given a Buy rating by Citi. The price target was $190, a 29% upside over its current price of $147.57. The analyst thinks there are 10 reasons why the company “is not over,” ranging from a pristine balance sheet to the expansion of Hollister to the fact it is seeing "one of the strongest turnarounds in retail history” (the full list is detailed here).
Energizer was upgraded by Truist Securities to a Buy, with a price target of $40 - 23% higher than its current price. The analyst based this on two major factors. First, the negative perception of the battery market, which was heightened by the volatility during the COVID-19 pandemic, is expected to improve. Second, worries about Energizer's high leverage ratio amid rising interest rates are likely to ease.
Take-Two Interactive, the video game company, was given a Buy rating and a $194 target price by Atlantic Equities. This projected upside of 20% is based on the upcoming release of GTA VI, which the analyst believes will have a "transformational impact" on the company’s financials that will outperform market expectations.
IT’S ALL ABOUT NVIDIA
What are the analysts saying after Nvidia’s earnings?
There was certainly a lot of volatility around Nvidia’s earnings - its share price is down almost 8% this week to sub $120. However, Walter Bloomberg quickly pointed out that many analysts see things differently.
INDUSTRY FOCUS
Healthcare stocks being tipped this week.
This week, analysts highlighted several healthcare stocks, many of which are projected to have significant upside potential. These included:
Trevi Therapeutics, which was given an outperform rating by Raymond James and a target price of $9. This represents a huge 185% upside over its current price of $3.16. Trevi is advancing the development of Haduvio, an extended-release oral formulation of nalbuphine, an unscheduled opioid traditionally approved for pain management. Raymond James points out that in a Phase 2a study, Haduvio delivered "best-in-class, statistically significant" reductions in cough frequency for patients with chronic cough linked to idiopathic pulmonary fibrosis. According to Raymond James, Haduvio has the potential to be the first treatment available for chronic cough associated with idiopathic pulmonary fibrosis and could also be among the first treatments to reach the market for refractory chronic cough.
H.C. Wainwright also started covering Trevi, with a $6 price target (a 90% upside).
Avidity Biosciences has been given an Overweight rating by Barclays. Their price target is $68 - a 43% upside. Avidity presented encouraging clinical data from three different programs, demonstrating the effectiveness of its antibody-oligonucleotide conjugate platform in successfully delivering RNA therapies into muscle tissue, according to an analyst's research note. Barclays therefore sees a “meaningful market opportunity” from Avidity’s current programs.
Kymera Therapeutics was upgraded to Outperform by Wolfe Research. Analyst Andy Chen gave it a price target of $65, a 34% upside over its current price of $48.36. The upgrade came after an in-depth assessment of Kymera's two key assets, IRAK4 and STAT6, and their impact on the company’s overall value and stock performance. Chen believes Kymera's STAT6 degrader is superior to Recludix’s inhibitor. Also, the recent IRAK4 trial expansion enhances confidence in its success by “delaying two relatively scary catalysts in exchange for a safer STAT6 catalyst.” Kymera has become “safer to trade.” The analyst suggests the current share price of $47 reflects low expectations, with a potential fair value of $145 if STAT6 is approved. Wolfe Research views Kymera as a “great long-term trade,” particularly with additional value expected from the TYK2 degrader by late 2025.
Lastly, PTC Therapeutics was upgraded by UBS to Buy with a price target of $47 - a 33% upside over its current price. With several new drug applications expected this year and potential commercial launches next year, along with upcoming clinical milestones, there is significant upside potential for the stock, according to the analyst's research note. The firm believes that investors' focus on the challenges faced by Translarna, following its unexpected removal from the European Union market, has led to many of PTC’s pipeline programs being undervalued at current levels. UBS anticipates further upside with the potential approval and launch of a phenylketonuria treatment in 2025.
PRESS STOCK TIPS
Barron’s tips this “non-obvious” AI stock.
Barron's has highlighted a buying opportunity in Vertiv Holdings, despite a recent 14% drop in its stock price. Vertiv, a provider of critical infrastructure for data centers, reported strong second-quarter earnings, with sales increasing by 13% to $1.95 billion and earnings jumping nearly 50% to 67 cents per share, both surpassing analyst expectations. However, the stock declined due to broader market concerns that companies like Alphabet, Amazon, and Microsoft might be overinvesting in AI.
Barron's argues that these concerns are exaggerated and that Vertiv's fundamentals remain solid. J.P. Morgan’s Stephen Tusa, who rates the stock as Overweight, believes the market’s negative sentiment is unwarranted. Vertiv's orders grew by 57% year-over-year, and the data center market, expected to reach $30 billion this year, is poised for continued growth.
Additionally, Vertiv has beaten earnings estimates for six consecutive quarters under CEO Giordano Albertazzi. The recent stock drop has reduced Vertiv's valuation to 25.8 times forward earnings, down from 32.8 times, making it more attractive than competitors like Eaton. Barron's suggests that Vertiv is now an appealing investment with strong upside potential as the industry grows.
EXTRA GRADE
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