We’re in interesting times, there’s no doubt about that. The COVID crisis is receding, the economic reopening is proceeding apace – but there are inflationary worries. The Biden Administration is committed to a heavy spending program, including generous extended unemployment benefits – which in some cases can exceed wages. As a result, the labor market is apparently stuck, running in low gear and prompting some concern that the recovery may not gain traction.
Taking a macro view of the economic situation, Patrick Spencer, vice-chair of equities at Baird, is bullish on stocks and sees positive long-term prospects on the jobs front.
“The earnings yield of the S&P… for the next two years, you get a 5% earnings yield… and you’re getting 1.5% in bonds. So, equities still are the only place to be... We’ll see the leadership change from value stocks – cyclical stocks – back to growth towards the end of this year,” Spencer opined.
Turning his attention to the job situation, Spencer acknowledges that the high benefits may be keeping workers at home, but goes on to add that “…COVID support finishes in September, and at that point… that will change, and you’re going to get those people back into the workforce.”
Turning Spencer's outlook into concrete recommendations, Baird analyst Joel Beatty is pounding the table on two stocks that look especially compelling. According to the analyst, each name is poised to surge over 60% in the 12 months ahead. Using TipRanks’ database, we found out that both tickers have gotten a thumbs up from analysts at other firms as well.
The first of Beatty’s picks we’re looking at, Atreca, is an early-stage biopharmaceutical research company focusing on oncological immunotherapies – that is, developing novel drugs which will stimulate the patient’s own immune system to attack tumor cells and tissues. Atreca uses a proprietary technology to profile the patient’s immune response, identifying antibodies and T-cell receptors that are the keys to successful treatments.
Atreca has multiple pipeline projects in development, the majority still in pre-clinical phases. The company’s lead candidate, ATRC-101, is currently undergoing a Phase 1 study, with 20 patients enrolled, evaluating the drug against several different solid tumor malignancies. The company reported that all patients have completed the three-week dose limiting toxicity assessment period, without adverse effects. Atreca is looking to enroll an additional patient cohort to assess a higher dose, and expects to release the initial summary data in July of this year.
In his coverage of Atreca, Beatty writes, “…we see favorable risk/reward heading into early clinical data in July for ATRC-101 in solid tumors. While we view the readout as high risk, we believe downside is limited due to 1) the newly announced pipeline agent targeting EphA2 (a target that has had recent validation by Bicycle Therapeutics), 2) the partnership with Xencor, and 3) the relatively low ~$100M enterprise value implied by the current stock price."
The analyst added “We believe Atreca’s unique antibody library has the potential to support a robust pipeline with multiple mechanism (T cell engagers, directed killing and toxin conjugates)…”
To this end, Beatty sets a $27 price target on this stock, suggesting a robust upside of 203% for the year ahead. Unsurprisingly, the analyst rates BCEL an Outperform (i.e. Buy). (To watch Beatty’s track record, click here)
It’s not often that the analysts all agree on a stock, so when it does happen, take note. BCEL’s Strong Buy consensus rating is based on a unanimous 4 Buys. The stock’s $29 average price target suggests a 225% and a change from the current share price of $8.91. (See BCEL stock analysis on TipRanks)
The second Beatty pick we’re looking at is Syndax, another biopharma company. This research-based firm is working on combination therapies for multiple cancer indications. The company’s pipeline includes two main drug candidates, axatilimab and SNDX-5613.
Syndax has two clinical trial programs ongoing. AGAVE 201 is a Phase 2 trial of axatilimab, testing the drug as a treatment for patients with ‘recurrent or refractory active chronic graft versus host disease.’ Axatilimab is a monoclonal antibody that act through blocking the colony stimulating factor 1 (CSF-1) receptor. The study is testing three different dosing levels. Results from earlier testing will be released later this year; the AGAVE study results are expected to be released in 2023. Axatilimab was granted an Orphan Drug designation by the FDA earlier this year.
The second clinical trial is for SNDX-5613. This trial, AUGMENT 101, is a Phase 1 study, testing the drug candidate against MLLr leukemias. In pre-clinical testing, the drug blocked the menin-MLL1 interaction, leading to tumor cell death. Early data from the AUGMENT 101 study showed 48% overall response rate among patients.
Beatty sees three positive factors for Syndax going forward, including: “1) … the potential for success for SNDX-5613 in NPM1 patients is underappreciated, 2) the company appears to be largely or completely funded through registrational data for both SNDX-5613 and axatilimab in 2023, and 3) we see potential for upside from business development, leverage SNDX’s business development and clinical development strengths.”
In line with these upbeat factors, Beatty rates the stock an Outperform (i.e. Buy), and his $31 price target implies a 12-month upside of 65%. (To watch Beatty’s track record, click here)
Overall, SNDX has received5 recent analyst reviews, breaking down to 4 Buys versus just 1 Hold and making the analyst consensus rating a Strong Buy. The 12-month average price target stands at $27.40, marking ~46% upside potential from current levels. (See SNDX stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
