What to make of markets today? Everything is both up and down. The major stock indexes are showing strong gains for the past year, but have seen recent pullbacks. High volatility, however, brings on opportunities. During these pullbacks, investors get a chance to ‘buy low and sell high,’ taking advantage of short-term falls in share prices.
There’s risk, of course. Stocks don’t exist in a vacuum, and the forces tugging on them are subject to their own varying influences. Inflation worries, sparked by Federal spending plans, have pushed up bond yields, but the Federal Reserve has no intention of raising interest rates any time soon. The financial landscape is uncertain – and the only clarity is that, for now, stocks are currently offering the best rates of return.
Wall Street’s analysts are still seeing plenty – in their words – attractive entry points, stocks that are primed for just this sort of trading. We’ve used the TipRanks database to pull up the details on three such stocks. Let’s take a closer look.
AbCellera Biologics (ABCL)
We’ll start with AbCellera, which holds a fascinating position in the biotech industry. The company is a leader in human antibody research, researching the immune system to develop antibodies which be used as the base for new drugs and disease treatments. AbCellera – and its tech platform – have been involved in the fight against COVID-19 since last summer, researching potential antibody treatments for the virus. Its Covid-19 drug, Bamlanivimab, developed in partnership with Eli Lilly, was granted an emergency use authorization by the FDA this past November, and has shown positive results in two Phase 3 clinical trials.
AbCellera is no stranger to pandemic-related research. The company had a leading role in the Pandemic Prevention Platform, part of the DARPA Biological Tech Office. AbCellera works on developing countermeasures to pandemic agents on an accelerated timescale.
ABCL shares are new to the public market; the company held its IPO this past December. In its first day of trading, ABCL jumped from a $20 initial price to an afternoon high above $70 before closing the day at $58.90. The IPO raised over $555.5 million in gross proceeds.
Since then, the stock has fallen, and ABCL shares are now down 55%. This opens up the ‘attractive entry point’ seen by Credit Suisse analyst Tiago Fauth.
“With the pace of new company creation in biotech at highs, and a clear value proposition for partners (high-throughput solution intended to shorten the antibody discovery cycle and generate higher probability drug candidates), we believe the pullback in shares offers an attractive entry point for investors looking to capitalize on the disruptive potential of a leading technology-powered drug discovery platform,” Fauth opined.
Getting into the details, the Credit Suisse analyst adds, “We believe ABCL offers uniquely strong thesis fundamentals that clearly stand out from some of the comps that have lagged in recent days, including (1) visibility on substantial near-term cash flows generation from bamlanivimab and no financing overhang, (2) a differentiated and increasingly validated discovery platform with a large TAM, and (3) underappreciated LT business model optionality.”
To this end, Fauth gives ABCL shares a $54 target price, suggesting a robust 103% upside potential by year’s end. His bullish target supports his Outperform (i.e. Buy) rating. (To watch Fauth’s track record, click here)
Sometimes, Wall Street’s analysts all agree, and that’s the case here. ABCL has 5 recent reviews and all are to Buy, giving the stock a Strong Buy consensus rating. Shares are trading for $26.55 with an average target of $55.80 implying ~107% one-year upside. (See ABCL stock analysis on TipRanks)
Ionis Pharmaceuticals (IONS)
The next ‘attractive’ stock we’re looking at is Ionis Pharmaceuticals, a California-based clinical research firm focusing on RNA-targeted therapeutics. These medications are designed to interact with the patient’s own RNA, making for a precise treatment that disrupts disease processes. Ionis has three drugs approved and an active pipeline of candidates in development.
The approved drugs are Spinraza, used to treat spinal muscular dystrophy; Tegsedi, used to treat the neurodegenerative disease ATTR; and Waylivra, which treat genetically caused triglycerides in the blood. Of the three drugs, Spinraza has the highest sales, and brought in $2 billion in worldwide revenue last year. More than 11,000 patients were receiving Spinraza at the end of 4Q20. The other two approved drugs, Tegsedi and Waylivra, saw product sales increase 65% from 2019 to 2020. Strong product sales allowed Ionis to finish 2020 with $1.9 billion in cash on hand.
The stock has slipped 30% since its recent peak in January, but Oppenheimer’s 5-star analyst Kevin Degeeter views the “current valuation as offering an attractive entry point for investors with 9-plus month outlook…”
Expanding on this outlook, the analyst adds, “We view simplification of IONS’s portfolio and transition from partnering to investment in wholly owned pipeline programs as offering a catalyst for unlocking value from the RNAi platform. We expect IONS shares to enjoy steady multiple expansion as the company diversifies revenue away from Spinraza royalties toward in-house orphan drug therapies, including TTR. There could be upside to our outlook if IONS identifies creative structures to unlock value from its broad pipeline of partnered programs with Biogen, Pfizer, Roche, and Novartis.”
Based on the above, DeGeeter rates IONS shares an Outperform (i.e. Buy), and sets a $63 price target that implies room for a 49% one-year upside. (To watch DeGeeter’s track record, click here)
What does the rest of the Street think? Looking at the consensus breakdown, opinions from other analysts are more spread out. 6 Buys, 3 Holds and 2 Sells add up to a Moderate Buy consensus. In addition, the $56.70 average price target indicates 33% upside potential. (See IONS stock analysis on TipRanks)
From biopharma and biotech, we’ll change gears and take a look at digital tech. Equinix is a leader in the colocation data center market, operating over 200 data centers in 25 countries across the America, Europe and the Middle East, and Asia. The company does business as a real estate investment trust, owning and managing the data centers, which are leased out to business clients.
As can be imagined, a major owner/operator of data centers would find itself well-positioned to reap benefits during the COVID-19 pandemic – and Equinix did. It might be fairer to say, however, that the company’s model proved immune to the virus. Equinix’s business has been growing for 18 years, and the corona crisis couldn’t dent that. In 4Q20, the company recorded its 72nd consecutive quarter of sequential revenue growth. The top line for 2020 came in at $5.99 billion, up 8% year-over-year. Acquisition costs and losses due to debt extinguishment pushed income down by 27% yoy. Looking ahead, the company projects income in range of $6.58 billion to $6.64 billion, for another annual gain of 10% to 11%.
Equinix is continuing to expand, and earlier this month released plans for $3 billion hyperscale program, financed in part by joint venture partners. The project will increase the company’s ability to meet the demands of its 10,000-strong customer base.
Sami Badri, in his coverage of this stock for Credit Suisse, writes of Equinix’s general situation.
“[As] we head towards a post-COVID world, digital leaders will be reminded of the importance of minimizing time to market and the ability to rapidly alter workload capabilities, both of which are eased through the use of the Equinix Metal Platform… Through its partner solutions EQIX will seek to complement its existing interconnection, networking and compute services to offer an expanded choice of Infrastructure as a Service solutions, which will only grow EQIX’s appeal among data center customers looking for a long-term solution to best serve their end consumers,” Badri wrote.
Regarding the stock’s value to investors, Badri adds, “EQIX is trading below large cap peer DLR based on consensus estimates, also a new recent development. We believe the recent pull back in EQIX’s trading price makes this a very attractive entry point.”
In all, the analyst gives this stock an Outperform (i.e. Buy) rating, and his $942 price target implies a 43% upside over the next 12 months. (To watch Badri’s track record, click here)
Who doesn’t like a market leader with a near two-decade record of revenue growth? Wall Street’s analysts are unanimous here, giving EQIX 13 Buy reviews for a Strong Buy consensus rating. Shares are selling for $660.23, and their $838.92 average price target implies a 27% one-year upside potential from that level. (See EQIX 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.