As the year winds toward its close, it’s time once again to engage in the age-old practice of picking out the changes that lie waiting in the year ahead. Wall Street’s stock pros are hardly immune from this; every year, they tag their top picks from the equity markets for the calendar change, and this year is no exception. The analysts are looking ahead toward the post-New Year market landscape, and picking out potential winners for investors to consider.
We've opened up the database at TipRanks to pull up the details on two such "top picks." The pair share two attributes that are sure to attract attention – a Strong Buy rating from the analyst consensus, and plenty of upside potential for the coming year.
89bio, Inc. (ETNB)
We’ll start with a clinical-stage biopharma company, 89bio. This firm has focused its research on severe, chronic, disease conditions affecting the liver and heart, specifically non-alcoholic steatohepatitis, or NASH, a serious liver disease, and hypertriglyceridemia, or SHTG, a cardio-metabolic disorder.
89bio currently has just the one drug candidate, pegozafermin, which is the subject of two clinical trial research programs, one on each of these conditions.
The company has announced that it has completed enrollment in the Phase 2b ENLIVEN trial of pegozafermin against NASH , and expects to release top line data during 1Q23.
On the cardiology side, 89bio has released data from the ENTRIGUE Phase 2 trial of pegozafermin, which showed significant benefits in triglyceride reduction along with improved glycemic control and liver fat reduction. The company aims to initiate a Phase 3 trial of pegozafermin against SHTG during 1H23.
These trials don’t come cheap, but 89bio had $193.3 million in cash on hand as of September 30 this year. This is set against $27 million in combined R&D and G&A expenses in 3Q22.
In her recent coverage of this stock, Cantor analyst Kristen Kluska outlines her reasons for giving it ‘top pick’ status – and a clear path forward for the shares. She writes, “We believe ETNB has one of the strongest near-term inflection opportunities in our coverage universe, despite a recent strong run up. We are making 89bio a top pick into the 1Q23-guided Phase 2b ENLIVEN data for pegozafermin (PGZ; glycoPEGylated FGF21 analog) in non-alcoholic steatohepatitis (NASH).”
"We believe 89bio's current valuation, which is roughly half in cash at this point (however, the company is actively spending) and isn't really attributing much credit to program potentials despite there being a great deal of interest," the analyst went on to add.
Along with her upbeat outlook, Kluska gives ETNB shares a rating of Overweight (i.e. Buy), while her price target, set at $34, implies a strong one-year gain of 315%. (To watch Kluska’s track record, click here)
Overall, there’s a Strong Buy consensus rating on this stock, reflecting the 6 unanimously positive recent analyst reviews. The shares are trading for $8.19, and their $28 average price target suggests a potential upside of 242% for the next 12 months. (See ETNB stock forecast on TipRanks)
The second stock we'll loot at is Arvinas, a biotech company working with protein degradation, a new field in clinical research offering plenty of open avenues to research new therapeutic agents. Arvinas is at the clinical stage, and is using its proprietary PROTAC platform to engineer proteolysis targeting chimeras which can be used in the treatment of a variety of debilitating and life-threatening conditions. The company has 11 active research tracks, including 3 at the clinical trial level.
Arvinas’ leading drug candidate, ARV-471 (a co-development with Pfizer) is being studied as a treatment for metastatic breast cancer – and earlier this week, the company announced new data from the VERITAC Phase 2 expansion trial. The data showed a 38% clinical benefit rate, along with a continued favorable tolerability profile. The full data release is scheduled for early next month. Arvinas intends to initiate two Phase 3 studies of ARV-471 - the first by the end of this year..
The company has two additional clinical research tracks. The first of these, on ARV-110, or bavdegalutamide, is a study in the treatment of metastatic castration-resistant prostate cancer (mCRPC). During the upcoming 1H23, the Arvinas expects to confirm the dose selection and receive health authority feedback prior to a global Phase 3 trial, scheduled for initiation in the second half of next year. On the other drug candidate, ARV-766, Arvinas is preparing to release Phase 1 dose escalation trial data, against mCRPC (metastatic castrate resistant prostate cancer), during the second quarter of 2023.
Analyst Richard Law, from Credit Suisse, recently updated his coverage of Arvinas, writing, “ARVN is now our new ‘Top Pick’… based on ARV-471’s best-in-class potential as an estrogen receptor degrader. Furthermore, we are upgrading ARVN as our ‘top pick’ due to the many upcoming catalysts that could potentially boost the stock price and the high confidence from ARVN and PFE in launching two pivotal studies for ARV-471 ahead of completion of Ph. 2 studies.”
Law puts an Outperform (i.e. Buy) rating here, along with an $81 price target indicating potential for 105% upside in the year ahead. (To watch Law’s track record, click here)
With 11 analyst reviews on file, breaking down to 9 Buys and 2 Holds, Arvinas gets a Strong Buy rating from the Street’s analyst consensus. The average price target of $77.60 suggests a robust 96% upside from the current going share price of $39.56. (See ARVN stock forecast on TipRanks)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
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.