Coronavirus fears have weighed heavily on the market, and investors are seeking refuge. While the situation in China is reportedly improving, health officials warn the spike in new cases throughout the rest of the world underscores the risk of a global pandemic. These statements have rattled financial markets; in the last five days alone, the S&P 500 and NASDAQ indexes have shed 8% and 9% of their value, respectively.
Against this backdrop, Wall Street pros remind investors not to panic and rush to a sell-off, pointing out that a select group of tickers still represent compelling opportunities. So, as the broader market plunges, how are investors supposed to find the stocks that are standing strong?
Using TipRanks’ Stock Screener tool, we were able to lock in on 3 stocks that have held their own amid the public health crisis. Not only has each been assigned enough bullish ratings to earn a “Strong Buy” analyst consensus, but all of the names also boast plenty of upside potential. Let’s dive in.
iClick Interactive Asia Group (ICLK)
As an independent online marketing and enterprise data solutions company, iClick enables marketers from all over the world to reach consumers in China. The Hong Kong-based name provides customers with a proprietary platform featuring omni-channel capabilities to meet all of their marketing needs. While coronavirus concerns wreak havoc on the market, ICLK has gained 45% year-to-date, a fact that hasn’t gone unnoticed by the Street.
Jeffries analyst Thomas Chong believes that its machine learning and AI-based technology have helped it cement its status as one of the leading marketing technology companies in China. Thanks to its “one-stop shop solution” for both user engagement and acquisition as well as vast consumer data, the company has been able to partner with over 114,000 mobile apps and 2.1 million websites in China, including Tencent which is a platinum partner.
With Tencent accounting for 60% to 70% of the company’s gross billings, Chong sees it as potentially fueling significant growth for ICLK. “We estimate marketing solution revenue to grow at 20% year-over-year and 18% year-over-year in 2019 and 2020, benefiting from the secular trend of Tencent’s social advertising. We consider iClick as an independent marketing technology player benefiting from the unique marketing environment in China due to relatively fragmented market share among different internet players vs overseas,” he explained.
Additionally, Chong cites its investment in enterprise solutions as being encouraging, arguing that while ICLK may incur losses as a result, the efforts will pay off in the long run. “In 2019, iClick has been stepping up efforts in enterprise solutions on smart retail through Tencent’s mini-programs… We estimate revenue from enterprise solutions to increase from about $10 million in 2019 to $24 million in 2020 and $50 million in 2021, with the number of customers to increase from 30 in 2019 to 60 in 2020,” he stated.
In line with his optimistic outlook, Chong started his ICLK coverage by publishing a Buy rating. At $7.96, his price target implies shares could climb 71% higher in the next twelve months. (To watch Chong’s track record, click here)
Looking at the consensus breakdown, it has been relatively quiet when it comes to other analyst activity. That being said, the two other analysts covering the stock see it as a Buy, making the consensus rating a Strong Buy. The $7.82 average price target puts the upside potential at 68%. (See iClick stock analysis on TipRanks)
Avadel Pharmaceuticals (AVDL)
Avadel Pharmaceuticals is focused on developing solutions to address the unmet needs of patients. In addition to its three products already on the market and its development candidate, AVDL is up 37% since the beginning of 2020, making it a stand-out among analysts.
Part of the excitement is related to its FT218 candidate. The company’s lead investigational asset, which is in Phase 3 development, was designed as a sodium oxybate formulation for once-nightly use and features patented Micropump technology for extended-release oral suspension to treat excessive daytime sleepiness (EDS) and cataplexy in narcolepsy patients. Previously, management announced that the FDA allowed it to amend the statistical analysis plan (SAP) under the special protocol assessment agreement (SPA). As a result, the company can use a smaller sample size.
Ladenburg Thalmann’s Matthew Kaplan points out that this pushed the enrollment completion and REST-ON study data readout timeline forward by about twelve months. As enrollment closed in December, top-line data is expected to be released in Q2 2020. According to Kaplan, this data could support an NDA in the second half of this year as well as possible approval in 2021. Should the candidate receive the go ahead, the four-star analyst believes that it would be superior to the current standard-of-care.
To this end, Kaplan recommends investors snap up shares before the REST-ON Phase 3 study readout. “We believe that the majority of the value of AVDL is the FT218 program which has completed enrollment and on track to read out in 2Q20...Given the FT218 pharmacokinetic profile, which was detailed at the Annual Meeting of the Associated Professional Sleep Societies during June 2019 and was also highlighted at the World Sleep Congress in late September 2019, combined with the known efficacy profile of sodium oxybate, we believe there is a high probability of success for the REST-ON pivotal study,” he commented.
It should come as no surprise, then, that Kaplan stayed with the bulls, reiterating his Buy call. Adding to the good news, the analyst also bumped up his price target from $8 to $14, implying 35% upside potential. (To watch Kaplan’s track record, click here)
Like iClick, Avadel has received 3 Buy ratings vs no Holds or Sells in the last three months, and thus, the consensus rating comes in as a Strong Buy. Not to mention the $14.33 average price target brings the upside potential to 38%. (See Avadel stock analysis on TipRanks)
Biotech company Novavax uses proprietary recombinant nanoparticle vaccine technology to develop vaccine candidates, most recently announcing that it’s advancing an experimental coronavirus vaccine. With this welcome piece of good news pushing shares 132% higher since the year’s start, it’s no wonder Wall Street focus has zeroed in.
On February 26, Novavax revealed that it plans to initiate human testing for two or more novel COVID-19 vaccine candidates in either May or June. Currently, several nanoparticle vaccine candidates are being studied in animal models before the ideal candidate is selected. As the company only began development on January 10, the announcement was a pleasant surprise for the analyst community.
Michael Higgins of Ladenburg Thalmann highlights its technology which uses both its insect-based vaccine platform and its novel Matrix-M adjuvant as making it the ideal player to combat the coronavirus. Additionally, while some have questioned if a vaccine will be an effective course of action for coronavirus, the analyst believes that a vaccine will be necessary.
“We highly doubt this flu outbreak goes away largely on its own since some patients with the prior viruses were highly symptomatic and quarantined, while many developing COVID-19 are contagious before being sick enough to be quarantined,” he explained.
Higgins doesn’t dispute the fact that there are other possible drug treatments for COVID-19, including remdesivir from Gilead, but argues that this doesn’t eliminate the need for a vaccine. Additionally, as Novavax has already shown it can produce a safe and effective vaccine against MERS-CoV, the analyst stated “investors are right to buy up NVAX shares” following the February 26 news.
Bearing this in mind, Higgins maintained a Buy recommendation and $27.50 price target. This target conveys his confidence in NVAX’s ability to soar 198% over the next year. (To watch Higgins’ track record, click here)
What does the rest of the Street think about NVAX’s prospects? It turns out that they also have high hopes for the biotech. With 100% Street support, or 4 Buys to be exact, the message is clear: the stock is a Strong Buy. At 17.38, the average price target suggests 89% upside potential. (See Novavax stock analysis on TipRanks)