‘Load Up,’ Says Raymond James About These 2 ‘Strong Buy’ Stocks
There have been abundant returns for investors this year as the markets have staged a remarkable comeback following 2022’s rout. But with both the S&P 500, and particularly the NASDAQ, delivering excellent returns, the big hitters have been responsible for much of the market gains.
Raymond James CIO Larry Adam summed it up, saying, “Narrow leadership has been a key theme in the positive performance year-to-date, with mega-cap tech the main driver of the market’s performance… In our 3Q Outlook, we outlined that we did not see a significant decline in the tech sector in 2H23.”
However, while Adam does not foresee a big drop for tech on the horizon, he thinks that there might be better openings elsewhere, believing there could be an opportunity for “index performance to broaden out to laggard sectors,” such as healthcare.
With this in mind, we’ve taken a closer look at two healthcare companies that Raymond James analysts have labeled as Strong Buys. We also ran these tickers through the TipRanks database to see what the rest of the Street makes of their chances. Turns out they’re onside too; both are rated as Strong Buy by the analyst consensus. Let’s delve into the details.
Mirum Pharmaceuticals (MIRM)
The first stock Raymond James is calling attention to is Mirum Pharmaceuticals, a biopharmaceutical company focused on developing and bringing to market innovative therapies for rare liver diseases. Founded in 2018, the company’s primary goal is to address significant unmet medical needs in conditions that affect the liver, a vital organ responsible for various metabolic processes.
A biotech’s ultimate goal is to secure drug approval, a milestone that Mirum has successfully accomplished. Livmarli (maralixibat) has already received approval in the U.S. for treating cholestatic pruritus in patients with Alagille syndrome aged three months and older. Additionally, the company has submitted the drug for approval as a treatment for patients with PFIC (progressive familial intrahepatic cholestasis). The PDUFA date for this indication is scheduled for December 13, 2023.
Livmarli is also currently being assessed in the EMBARK Phase 2b clinical study as a treatment for patients with biliary atresia, a medical condition observed in infants, characterized by scarring and blockage of both the bile ducts within the liver and those outside of it. It is estimated that this market could be worth around $1.69 billion by 2029. Topline results from the trial are anticipated to see the light of day later this year.
Mirum’s busy schedule shows no signs of slowing down. The company recently entered into an agreement to buy Travere’s bile acid product portfolio, which includes commercial products Cholbam and Chenodal, for a total of $445 million.
It is the combination of upcoming catalysts and the acquisition that drives Raymond James’ Steven Seedhouse’s bullish thesis.
“We reiterate our Strong Buy rating based on 1) constructive outlook for 2H23 catalysts (primarily EMBARK biliary atresia study of maralixibat which we expect ~November) and 2) clever and cost-effective asset purchase (announced on July 17), which MIRM estimates will make it cash flow neutral in 1st quarter post deal closing (i.e., 4Q23E) on an already pro-forma >$200M annualized revenue base, which we expect will grow to ~$315M in 2024 per our new model (inclusive of maralixibat and TVTX bile acid franchise). The deal is fully financed by a PIPE priced at $26.25,” Seedhouse opined.
“Big picture,” Seedhouse summed up, “the acquisition solidifies MIRM as the preeminent pediatric and rare hepatology disease company with a now diversified commercial product lineup and series of upcoming data catalysts.”
That Strong Buy rating is backed by an $82 price target, suggesting the shares have room for very robust growth of 223% over the coming year. (To watch Seedhouse’s track record, click here)
4 other recent analyst reviews have reached the same conclusion – Buy – all naturally coalescing to a Strong Buy consensus rating. Going by the $52.25 average target, the shares will be changing hands for ~109% premium a year from now. (See MIRM stock forecast)
ADMA Biologics (ADMA)
Next up, we have ADMA Biologics, a biopharma firm that specializes in the development and commercialization of plasma-based products for the treatment of immune deficiencies and infectious diseases. The Ramsey, New Jersey-based company is primarily focused on utilizing its proprietary technology to collect human plasma and produce high-quality, FDA-approved plasma-derived therapies.
It’s mission accomplished on that front. ADMA’s has 3 commercial products available, including Bivigam and Asceniv, both indicated to treat primary humoral immunodeficiency (PI) and Nabi-HB, a single shot designed for enhanced immunity in hepatitis B.
The company is also seeing expansion of its plasma collection network. The Dallas, GA plasma collection facility recently gained FDA approval, becoming its ninth approved spot.
In 2022, the product portfolio raked in sales of $144 million. And going by the latest set of results, for Q1, the company is well on the way to beating that this year. Revenue increased by 95.9% year-over-year, to reach $57 million, while outpacing the Street’s call by $3.59 million. There was a beat at the other end of the scale, too, with EPS of -$0.03 edging ahead of the estimates by $0.01.
Looking ahead, ADMA expects full year 2023 total revenues to surpass $220 million, compared to consensus expectations of $212.36 million.
Assessing the company’s prospects, Raymond James’ Gary Nachman sees an even better performance ahead. “ADMA’s key products Bivigam and Asceniv have been taking share in the growing ~$10B U.S. immunoglobulin (IG) market for immunodeficiencies (ID), and the company has been enhancing its manufacturing capabilities and efficiencies, leading to improving margins and positive EBITDA (started 1Q23 and expected to grow from here) that should be very durable,” he explained.
“With limited pipeline catalysts, we’re looking for the updates on upcoming quarterly results and potential revisions to guidance, as well as the ongoing strategic review exploring value-creating opportunities (could include potential debt refinancing at some point), as key catalysts for the stock from here. We believe risk/reward on the company’s execution is favorable, and the stock is worth owning at current levels,” Nachman further said.
These comments underpin Nachman’s Strong Buy rating while his $5 price target implies share appreciation of 31% over the one-year timeframe. (To watch Nachman’s track record, click here)
Over the past 3 months, 2 other analysts have waded in with ADMA reviews and both are also positive, making the consensus view here a Strong Buy. The forecast calls for 12-month gains of 39%, considering the average target stands at $5.17. (See ADMA stock forecast)
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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.
