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Two months ago, Morgan Stanley had posed a question: 'Will the September market swoon take longer than average to recover?' According to the firm’s chief US equity strategist Mike Wilson, we can “Fast forward to today, and the answer to that question is a definitive no. Instead, our data show retail investors remain steadfast in their commitment to buying equities...”
Wilson sees retail investors giving a large boost to the market’s current upward impetus, and paradoxically, he believes that the prospect of difficult times is motivating them. In Wilson’s view, retail investors are moving into stocks as a defensive measure, recognizing that in the current economic environment of rising inflation and low interest rates, high-performance stocks provide a degree of protection for investment portfolios.
With this in mind, we wanted to take a closer look at two stocks that just received Morgan Stanley's stamp of approval, with the firm projecting upside potential of more than 100% for each. Using TipRanks’ database, we found out that the rest of the Street is also on board as both have earned a “Strong Buy” consensus rating.
Taysha Gene Therapies (TSHA)
We’ll start with a Texas-based biopharmaceutical company, Taysha Gene Therapies. This company is focused on developing new treatments for monogenic central nervous system (CNS) diseases. The company has an active pipeline, featuring 26 adeno-associated virus therapies. These viruses are native to humans and other primates, and are used to deliver therapeutic agents – modified genes – directly to affected cells in the patient’s body. Three of Taysha’s pipeline candidates are in clinical trials, while the remainder are in pre-clinical phases of development.
Of the drug candidates in clinical trials, the leader is TSHA-120. Earlier this year, the company released visual acuity data from the Phase 1/2 trials of TSHA-120 for GAN (giant axonal neuropathy, a genetic CNS disorder that manifests in early childhood). The company is expecting to receive regulatory guidance prior to additional testing before the end of this year.
Also entering the Phase 1/2 stage of clinical trials is TSHA-101, which the company announced in September of this year had received orphan drug designation from the European Commission. TSHA-101 is a treatment for infantile GM2 gangliosidosis, another CNS disease of early childhood – but one that leads to an early death, by the age of 4.
In another recent update, the company’s Angelman Syndrome (AS) program was the subject of a recent published data. The company publicized positive proof-of-concept preclinical data supporting its approach to treatment of AS, a CNS disorder that can cause severe physical and mental disabilities starting in early childhood. The company is targeting UBE3A gene replacement therapy as a treatment for this disorder. Taysha is expected to start IND-enabling studies early next year, prior to human clinical trials.
Taysha’s active pipeline drew Morgan Stanley's' Matthew Harrison attention. The analyst believes "Taysha’s clinically validated gene therapy approach and a rapidly advancing, robust pipeline with multiple catalysts ahead, sets the stage for upside."
How much upside? Harrison rates TSHA an Overweight (i.e. Buy), and his $39 price target implies a robust 140% one-year upside potential for the shares. (To watch Harrison’s track record, click here)
"We are Overweight Taysha and believe its broad AAV9 gene therapy platform, supported by management expertise in the space, has the potential to benefit patients with genetic disorders characterized by high unmet need... Taysha's pipeline includes four late-stage assets (in GAN, GM2, CLN1, and Rett syndrome) each having a risk-adjusted peak sales potential of $1B+," Harrison opined.
The Morgan Stanley view is no outlier on this highly speculative biotech. The stock has 8 reviews on record and all are positive, for a unanimous Strong Buy consensus rating. The shares are priced at $16.25 and their $44.14 average price target suggests room for ~172% upside growth. (See TSHA stock analysis on TipRanks)
The second Morgan Stanley pick we’ll look at is another biotech. AlloVir is focused on the treatment of viral disease, through the development of off-the-shelf, allogenic, virus-specific T-cell (VST) therapies. VSTs offer the potential to treat deadly viral diseases in patients with compromised immune systems. The company’s research pipeline features five drug candidates, in various stages of development from preclinical to Phase 3 pivotal trials.
The lead candidate, posoleucel, or ALVR105, is a multi-virus specific T-cell therapy aiming at 5 separate viral diseases: BK virus (BKV), cytomegalovirus (CMV), adenovirus (AdV), Epstein-Barr virus (EBV), and human herpesvirus 6 (HHV-6). These are all potentially life-threatening disease agents, and are particularly dangerous for transplant patients. Posoleucel is designed to combat the viral agents until the patient’s immune system recovers enough to take over.
Posoleucel currently has no fewer than 6 clinical trials ongoing, including a Phase 3 registrational study in virus-associated hemorrhagic cyctitis and three Phase 2 proof-of-concept studies. Impressively, in the Phase 2 CHARMS study, featuring hematopoietic stem-cell transplantation patients with treatment-refractory infection, posoleucel resulted in a 93% clinical response, with activity against all target viruses, after six weeks of treatment.
"We believe the VST platform has broad potential, and is de-risked by the CHARMS data. We have added AlloVir as a Top Pick based on a favorable risk/reward ahead of Phase II multi-virus prevention data in 4Q21," said Morgan Stanley's' Matthew Harrison
Harrison rates ALVR stock an Overweight (i.e. Buy), along with a $48 price target, showing his confidence in a 101% upside for the next 12 months.
"We are Overweight AlloVir as we believe there is significant opportunity for Viralym-M and other pipeline VSTs to meaningfully improve upon the standard of care in a number of viral indications," Harrison summed up.
All in all, other analysts echo Harrison's sentiment. 3 Buys and no Holds or Sells add up to a Strong Buy consensus rating. Given the $44 average price target, the upside potential comes in at 84%. (See ALVR 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.