As the year draws to a close, it’s time once again to engage in the age-old practice of spotting the changes that await the year ahead. Wall Street stock professionals are by no means immune to it; each year they tag their top picks from the stock markets for the calendar change and this year is no exception. Analysts look at the post-New Year market landscape and identify potential winners for investors to consider.
We’ve opened the TipRanks database to compile the details on two of these “top picks.” The pair shares two attributes that are sure to attract attention: a Strong Buy rating by analyst consensus and ample upside potential for the coming year.
89bio, Inc. (ETNB)
We’ll start with a clinical-stage biopharmaceutical company, 89bio. This company has focused its research on severe and chronic conditions affecting the liver and heart, particularly nonalcoholic steatohepatitis, or NASH, a severe liver disease, and hypertriglyceridemia, or SHTG, a cardiometabolic disorder .
89bio currently has only one drug candidate, pegozafermin, which is the subject of two clinical trial research programs, one in each of these conditions.
The company announced that it has completed enrollment in the Phase 2b ENLIVEN study of pegozafermin against NASH and expects to release key data during 1Q23.
In cardiology, 89bio has released data from the Phase 2 ENTRIGUE study of pegozafermin, which showed significant triglyceride-lowering benefits 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 as of September 30 of this year. This is versus $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 stock. She writes: “We believe ETNB has one of the strongest short-term inflection opportunities in our coverage universe, despite a recent strong bull run. We are making 89bio a top pick in the 1Q23-driven ENLIVEN Phase 2b data for pegozafermin (PGZ; glycoPEgylated FGF21 analog) in nonalcoholic steatohepatitis (NASH).”
“We believe 89bio’s current valuation, which is about half in cash at this point (however, the company is actively spending) and doesn’t give much credence to the program’s potential despite there being a lot of interest,” he continued. analyst add.
Along with his optimistic outlook, Kluska assigns ETNB stock a rating of Overweight (aka Buy), while his price target, set at $34, implies a hefty 315% annual gain. (To look at Kluska’s track record, Click here)
Overall, there is a Strong Buy consensus rating on this stock, reflecting 6 recent unanimously positive analyst reviews. The shares are trading at $8.19, and their $28 average price target suggests a 242% upside potential over the next 12 months. (See ETNB stock forecast on TipRanks)
The second stock we’ll be looting is Arvinas, a biotech company that works with protein degradation, a new field in clinical research that offers many open avenues for research into new therapeutic agents. Arvinas is in the clinical stage and is using its proprietary PROTAC platform to engineer proteolysis targeting chimeras that can be used in the treatment of a variety of debilitating and life-threatening conditions. The company has 11 active research pathways, 3 of which are at the clinical trial level.
Arvinas’ lead drug candidate, ARV-471 (a joint development with Pfizer) is being studied as a treatment for metastatic breast cancer, and earlier this week, the company announced new data from its expansion study of Phase 2 of VERITAC. The data showed a clinical benefit rate of 38%, along with a still favorable tolerability profile. The full release of the data is expected early next month. Arvinas plans to initiate two Phase 3 studies of ARV-471, the first by the end of this year.
The company has two additional clinical research pathways. The first of these, of ARV-110, or bavdegalutamide, is a study in the treatment of metastatic castration-resistant prostate cancer (mCRPC). During the upcoming 1H23, Arvinas expects to confirm dose selection and receive feedback from health authorities ahead of a global Phase 3 study, scheduled to begin in the second half of next year. For its other drug candidate, ARV-766, Arvinas is preparing to release data from its Phase 1 dose escalation study against mCRPC (metastatic castration-resistant prostate cancer) during the second quarter of 2019. 2023.
Credit Suisse analyst Richard Law recently updated his coverage of Arvinas, writing, “ARVN is now our new ‘Top Pick’…based on ARV-471’s improved potential as a receptor degrader of estrogen. Additionally, we are updating ARVN as our “Top Pick” due to several upcoming catalysts that could potentially increase the share price and ARVN and PFE’s high confidence in launching two pivotal studies for ARV-471 prior to the completion of the Ph studies. . 2 .”
Law assigns an Outperform (aka Buy) rating here, along with an $81 price target that indicates 105% upside potential in the year ahead. (To look at Law’s track record, Click here)
With 11 analyst reviews on file, split across 9 buys and 2 holds, Arvinas earns a Strong Buy rating from the Street Analyst Consensus. The average price target of $77.60 suggests a robust 96% upside from the current share price of $39.56. (See ARVN Stock Predictions on TipRanks)
To find good ideas for trading stocks at attractive valuations, visit TipRanks’ best stocks to buy, a tool that combines all of TipRanks’ stock insights.
Disclaimer: The views expressed in this article are solely those of the analysts featured. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.