Wall Street traders have no shortage of cliches, and here’s a happy thought for the New Year: ‘So goes January, so goes the year.’
Sam Stovall, chief investment strategist from CFRA Research, has taken note of this quirk, writing: “If the market does well in the month of January, then it usually does well for the full year. But if we find that a lot of money has flowed into the markets, right off the bat, then the indication is that it's likely to be a very good year.”
Talking of sentiment, the S&P 500 closed at a record high on the first trading day of 2022, after closing out 2021 with big gains for the third year in a row.
With this in mind, let’s look at two stocks which are flashing bullish signals and primed for gains this year. According to TipRanks' data, these are Strong Buys, with an upside potential for this year starting near 70%. Let’s dive in.
We’ll look first at Nurix Therapeutics. This is a clinical stage biopharmaceutical company, working on small molecule drug candidates designed to work with the body’s natural protein degradation processes. Nurix’s research is focused on ubiquitin E3 ligases, key enzymes in the protein breakdown process. This presents a unique therapeutic approach, applicable to a large number of disease conditions.
The company uses a proprietary platform, DELigase, to underpin the drug candidate discovery process. That process has led to a wide-ranging pipeline, with 10 current research tracks. These include 7 wholly-owned programs, with 4 in the protein degradation chimeric targeting molecule (CTM) portfolio and 3 in the ligase inhibitor portfolio. Most of these tracks are in pre-clinical phases, but the company does have two drug candidates at or entering Phase 1 human clinical trials. Nurix also has three early-stage preclinical research tracks conducted in partnership with larger drug companies.
Looking at the clinical trials, we find that the company’s leading drug candidate, NX-2127, is currently in Phase 1, with the trial being conducted at multiple clinical sites. The drug is an orally bioavailable degrader of BTK, used for the treatment of relapsed or refractory B-cell malignancies. The company announced in October that early data showed ‘robust BTK degradation achieved in all patients,’ with greater than 90% BTK degradation at the 200mg dose.
The other Phase 1 trial, of the E3 ligase inhibitor NX-1607, has entered the dose escalation study. The drug candidate is another orally bioavailable therapeutic agent, this one an inhibitor of CBL-B for immune-oncology applications. The Phase 1 study is currently ongoing.
Finally, Nurix announced on December 12 that it had received regulatory clearance from the UK Medicines and Healthcare products Regulatory Agency to initiate a Phase 1 trial of NX-5948, a drug candidate with potential in the treatment of oncological and autoimmune diseases of the central nervous system. The company expects to begin dosing patients in 1H22.
The research pipeline is the usual asset for a clinical stage biopharma, but Nurix also has partnership programs with other companies. These provide a modest revenue stream, in the form of collaboration payments, which in the company’s fiscal 3Q21 reached $10.3 million.
Analyst Robert Burns, writing from H.C. Wainwright, sees NX-2127 as the key point for Nurix, and describes the initial clinical data as ‘intriguing.’
“We note that NX-2127 has demonstrated a favorable safety and tolerability profile to date, with five of six initially dosed patients remaining on therapy. Furthermore, one of these patients has shown a partial response (PR), which is particularly noteworthy since this individual showed that roughly 68% of his leukemic cells carried a BTK mutation known to confer resistance to ibrutinib. BTK degradation exceeded 90% in both non-human primates (NHPs) and human subjects,” Burns noted.
In line with these comments, Burns rates NRIX a Buy, and his $62 price target implies an upside of 109% for the coming 12 months. (To watch Burns’ track record, click here)
It’s clear that Wall Street generally agrees with Burns, as the Strong Buy consensus rating on Nurix is unanimous and based on Buys only – 6, in total. The shares are selling for $29.65, and their $55.17 average price target suggests room for an 86% upside in 2022. (See NRIX stock analysis on TipRanks)
The second stock we’ll look at, Innovid, is a tech company in the online advertising world. Specifically, Innovid works in the Connected TV (CTV) niche, and counts over 1,000 world-class brands among its customers. Innovid uses built-for-CTV tech that allows marketers to navigate the online streaming environment and create effective campaigns to launch at scale.
An exuberant stock market has prompted a wave of new entries – and Innovid is among them. On December 1, the company announced that the CTV ticker had started trading, following a SPAC business combination with ION Acquisition Corporation II. The transaction brought $251 million in new capital to Innovid, and the ad-tech firm now boasts a market cap of $743 million.
In the run-up to its start as a public entity, Innovid released financial data for the first nine months of 2021. The company showed $64.3 million in total revenue, up 41% from the same period in 2020, driven by a 65% yoy gain in CTV revenue. CTV continues to expand its share of Innovid’s online video impression, from 39% in the first three quarters of 2020 to 46% in 2021.
BMO analyst Daniel Salmon, rated 5-stars by TipRanks, sees plenty of potential for Innovid to expand revenue in the CTV advertising sector.
“Innovid generates revenue through a simple impression volume x CPM pricing model. Revenue growth has been entirely driven by volume, but we think pricing growth could improve as Innovid increasingly complements its core ad serving technology with dynamic creative and measurement services. Moreover, we think there is potential for Innovid to begin charging by device (its currently one price for all platforms) and drive higher pricing from adding more value in CTV (e.g., potentially developing shopping capabilities),” Salmon wrote.
These comments back up Salmon’s Outperform (i.e. Buy) rating on the stock, and his $13 price target is indicative of a 108% one-year upside potential. (To watch Salmon’s track record, click here)
The stock has only picked up 3 reviews since going public – but they are unanimous in their positive take, giving Innovid its Strong Buy consensus rating. The average price target here is $11, suggesting a 76% upside from the current share price of $6.25. (See Innovid’s 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.
