The last few months have been tough for investors, as stocks have mostly been falling since mid-summer. To wit, the S&P 500, which peaked at the end of July, is down close to 8% from that high.
The headwinds behind these losses are well-known: stubborn inflation, the Fed’s persistence in sticking to a high-interest-rate, tight-money policy in response, a worsening geopolitical situation and related rising oil prices, increasing bond yields, and the uncertainty of an upcoming election; it would be a surprise if the markets had not slipped during that time.
But for the US equity research team at Canaccord Genuity, led by chief market strategist Tony Dwyer, the current conditions are a ripe opportunity. He sees the market as oversold and believes the “stage is set for a rally.”
“A potential rally in the bond market combined with an oversold condition in our four key tactical indicators creates an environment ripe for a near-term bounce in equities even if it proves temporary,” the strategist went on to say.
Running with this rally thesis, the stock analysts at Canaccord have picked out several stocks that can bring substantial gains for investors over the coming months – in one case in the order of almost 300%. That’s nothing to sneeze at, so let’s take a closer look, using data from the TipRanks platform to complement the Canaccord analysts’ comments.
Progyny (PGNY)
The first stock we’ll look at, Progyny, works in the world of medical fertility treatments. Specifically, Progyny operates as a third-party insurance provider specializing in fertility benefits management, offering coverage for fertility treatments, with comprehensive solutions that can benefit all parties involved: patients, their employers, and their physicians.
Progyny is working toward a world in which anyone who wants to have a child will be able to have a child, and its benefit solutions are designed to empower patients to make sound decisions. Operating on the patient care advocate model, Progyny aims to provide access to premier fertility specialist networks, so that patients can realize optimal outcomes at minimal cost.
The company’s revenues have been rising steadily since early 2022. In the last reported quarter, 2Q23, Progyny saw a top line of $279.4 million, for a 43% year-over-year – and beating the forecast by $17.23 million. The company’s bottom line came in at 15 cents per share, a result that beat the estimates by a nickel.
Writing on Progyny for Canaccord, analyst Richard Close, who holds a 5-star rating from TipRanks, notes several factors that are supporting the fertility industry, writing, “A highly competitive employment market and the push by corporate entities to address diversity, equity, and inclusion has led to increased adoption of richer and more inclusive family-building benefit offerings. This has provided a wave of growth that Progyny continues to ride despite economic uncertainty.”
Getting into some details for Prygyny specifically, Close adds, “Historically, an economic downturn has led employers to cut benefits to drive savings; however, Progyny has been resilient, achieving record new client wins in 2022 and describing the 2023 selling season pipeline as favorable. This strength further validates the value proposition that Progyny’s managed family-building benefits offer. Considering the positive growth outlook, profitable profile, and competitive differentiation, we recommend shares with a BUY rating.”
Along with that Buy rating, Close gives PGNY shares a $46 price target, implying an upside of 51% for the year ahead. (To watch Close’s track record, click here)
The Strong Buy consensus rating here is unanimous, based on 6 positive analyst reviews set recently. The shares are priced at $30.43, and their $50.17 average price target suggests a one-year upside of 65%, even more bullish than the Canaccord view. (See Progyny stock forecast)
Fluence Energy (FLNC)
Next on the list, Fluence, is an energy storage solutions provider, offering a series of products designed to promote economical and scalable energy storage. The company’s product lines can operate at multiple levels, and customers can choose from grid-scale storage systems to connection-ready small-scale modular systems. Fluence even offers energy storage designed specifically to work with photovoltaic cells. The company offers delivery and turnkey implementation for all of its energy storage installations.
Energy storage works best, and is most efficient, when it’s maintained properly, and Fluence backs up its installations – at whatever level best suits the customer’s needs and budget. The company offers four levels of support, from ‘guided service,’ in which Fluence will teach the customer’s maintenance team how to keep up the energy storage system, to ‘asset management,’ in which Fluence handles all aspects of energy storage maintenance.
On the financial side, Fluence reported a revenue beat in its results from fiscal 3Q23. In the quarter, which ended on June 30, Fluence had a top line of $536.4 million, nearly $62 million better than had been predicted and an impressive 124% gain y/y. The company operates at a loss, but the GAAP EPS loss of 20 cents per share was 3 cents better than the forecast.
Better, from an investor’s perspective, the company raised its fiscal 2023 full-year guidance, setting the new revenue target between $2 billion and $2.1 billion. The firm has solid prospects to keep up the business going forward, and has a work backlog worth $2.9 billion as of June 30.
Canaccord’s George Gianarikas covers this stock, and he is bullish on the combination of energy storage and the renewable energy sector and on Fluence, in particular. “Per company guidance, we expect Fluence to turn to positive adj. EBITDA in F2024; and then to positive free cash flow not long thereafter. Fluence’s hardware margins will likely never (at least not for a long time) break above the mid-teens; and that’s ok. They can still have a great business with high asset and inventory turns and strong returns on capital. Fluence is leading the global expansion of energy storage; a segment which will prove critical to the future energy system.”
Gianarikas is also upbeat on Fluence’s work model, and adds of the company, “As former tech analysts, it’s also hard to miss that the energy storage market looks eerily similar in purpose, design, and structure to the server/storage network built to serve the world’s communications/data systems; potentially making Fluence the energy system’s future Dell/HP.”
Taking this all together, Gianarikas gives these shares a Buy rating, along with a $34 price target that shows his own confidence in a one-year gain of a strong 104.5%. (To watch Gianarikas’ track record, click here)
Ther are 16 recent analyst reviews here, and their split – 9 Buys, 6 Holds, and 1 Sell – leads to a Moderate Buy consensus rating. The $30.81 average price target suggests an 85% upside potential from the trading price of $16.62. (See Fluence’s stock forecast)
Bicycle Therapeutics (BCYC)
Last up on our Canaccord-endorsed list is Bicycle Therapeutics, a clinical-stage biopharmaceutical company pursuing a novel approach to the development of cancer treatments. Specifically, Bicycle is working with ‘bicycles,’ a uniquely structured molecule that is capable of precisely delivering therapeutic agents to the targeted tumor, while hitting targets that have histories of resisting conventional modes of treatment. Bicycle molecules have potential to meet some of the significant unmet medical needs faced by cancer patients.
Bicycle Therapeutics aims to become the leader in attacking solid tumor cancers, and its pipeline reflects that goal. The company’s leading drug candidate, BT8009, is designed to treat metastatic bladder cancer. It targets the Nectin-4 molecule, which is overexpressed in tumor cells, and is now undergoing a Phase I/II trial as a monotherapy. The company, and its lead candidate, have been selected by the FDA to participate in an expedited clinical readiness program, designed to boost commercial-level manufacturing readiness for promising drug candidates.
The company’s other advanced drug candidates include BT5528, which targets the EphA2 receptor and BT7480, a fully synthetic tumor-targeted immune cell agonist that contains three separate bicycle molecules. Both of these drug candidates are at the Phase I/II level, and are showing satisfactory progress in the clinical studies.
In his coverage of Bicycle, Canaccord’s Bill Maughan notes several idiosyncratic headwinds that BT8009 will face. He writes, “We acknowledge the challenges that Bicycle will have bringing a second-in-class drug to the market. The pivotal trial will be enrolling against a commercially available Padcev in both 1L and 2L. And lack of head-to-head data means the company will have to rely on cross-trial comparison to make the case for a better drug. However, neither of these headwinds is strong enough to prevent a rigorous clinical program that provides sufficient data to assess whether the drug is best-in-class.”
He goes on, however, to take an upbeat view of the leading candidate, noting that it presents solid potential for the company: “We remain optimistic that ‘8009 can put together a best-in-class data package for urothelial, and we look forward to updates from the program at an upcoming R&D Day (the company is participating in two investor conferences this month – Nov 2 and Nov 15). We are also watching the upcoming dose expansion data readouts for triple-negative breast, ovarian, and non-small cell lung cancers.”
These comments support a Buy rating on BCYC shares, and Maughan also gives a $60 price target that implies a powerfully robust upside of 291% for the next 12 months. (To watch Maughan’s track record, click here)
With 10 recent analyst reviews, including 9 Buys and 1 Hold, Bicycle shares get a Strong Buy consensus rating. The stock is selling for $15.35, and its $46.50 average price target points toward a one-year gain of 203%. (See BCYC stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched 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.
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