It’s safe to say that stock investors are closing out 2024 in a rather upbeat mood. The markets posted substantial gains, with the S&P 500 surging nearly 27% year-to-date.
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The support for the current bullish trend is clear. The prospect of interest rate cuts, coupled with stronger-than-expected corporate earnings, is driving market confidence. Adding to the bullish outlook, last month’s election saw former President Trump secure a non-consecutive second term, fueling hopes for a pro-business, pro-growth economic policy.
Looking ahead, Oppenheimer’s chief investment strategist, John Stoltzfus, believes this rally is far from over.
“Traders and investors of bullish persuasion (of which we are part) point to fundamentals that suggest the current resilience of the economy and the stock market appear poised to continue into next year… Based on a number of factors including current stateside monetary policy, the resilience in economic growth, business activity, the consumer, and job creation evidenced in recent years and the current year, we initiate a price target for the S&P 500 by year-end 2025 of 7100,” Stoltzfus asserted.
With Stoltzfus’ target in mind, we turned our attention to two stocks that have earned a round of applause from Oppenheimer. According to the firm’s analysts, both are on track for massive gains, including one that could jump by nearly 580%.
After running the tickers through TipRanks’ database, it’s clear the rest of the Street is in agreement, with each earning a ‘Strong Buy’ consensus rating. Let’s take a closer look at what’s driving this broad-based enthusiasm.
Sagimet Biosciences(SGMT)
We’ll start with Sagimet Biosciences, the first stock to earn Oppenheimer’s backing – and for good reason. This biotech firm is pioneering a novel approach to drug development through its fatty acid synthase (FASN) inhibitors, a novel class of therapeutics with vast clinical potential.
Several diseases are linked to the overproduction of the fatty acid palmitate, and Sagimet’s clinical pipeline aims to target the dysfunctional metabolic and fibrotic pathways associated with these conditions. Chief among them is metabolic dysfunction-associated steatohepatitis (MASH), a severe liver disorder. As a key regulator of lipid synthesis, FASN represents a potential therapeutic target for the treatment of this liver condition.
The FASN pathway is implicated in various other conditions, ranging from relatively common issues like acne to more severe diseases such as cancer. However, the MASH trial track remains the company’s most advanced program.
On this front, Sagimet achieved a milestone earlier this year by completing the Phase 2b FASCINATE-2 trial. This study evaluated denifanstat, the company’s flagship product, as a treatment for F2/F3 MASH — a stage where patients experience moderate to advanced liver fibrosis. With no concerning safety or tolerability issues, denifanstat demonstrated a strong efficacy profile.
Sagimet is preparing to launch a Phase 3 trial for denifanstat by the end of the year and is planning to expand the trial to include patients with F4 MASH. The need for treatment in this area is immense, with around 22 million adults in the U.S. affected by MASH and limited options available.
Beyond MASH, denifanstat is also being tested in China for acne treatment, in collaboration with Ascletis. Acne offers another significant opportunity for Sagimet, as the FASN pathway plays a key role in sebum production, which contributes to the condition. The company anticipates releasing topline results from a Phase 3 trial in the second half of 2025.
Lastly, Sagimet is exploring denifanstat as a treatment for the aggressive brain cancer glioblastoma, specifically recurrent glioblastoma multiforme (rGBM), in combination with bevacizumab. Phase 2 data of this combination therapy met the primary endpoint of progression-free survival (PFS), with a 31.4% six-month PFS compared to 16% for bevacizumab monotherapy. The Phase 3 trial, like the acne study, is being conducted in China with Ascletis, with topline data expected in the first half of 2025.
Given denifanstat’s potential and SGMT’s $4.39 share price, Oppenheimer analyst Jay Olson believes now is the time to get in on the action.
“SGMT’s current market cap is ~$141M, which to us appears undervalued based on the promising MASH program with validation from large pharma, e.g. NVO and LLY’s clinical efforts to expand incretin approval beyond obesity into MASH and Boehringer Ingelheim’s recent $2B partnership with Suzhou Ribo Life Science Co. and Ribocure Pharmaceuticals to develop an siRNA-based MASH therapeutic… Our SOTP analysis values denifanstat at $18/share in F2–F3 MASH, $2/share in F4 MASH, $1/share in recurrent glioblastoma, $5/share in moderate-to-severe acne, and estimated cash by YE24 at $4/share,” Olson stated.
“While we see potential for denifanstat to attract market share through its differentiated efficacy and safety as a monotherapy, its potential as a combination therapy further strengthens our conviction surrounding its commercial success if approved,” the analyst added.
To this end, Olson rates SGMT an Outperform (i.e. Buy), along with a $30 price target. Should the target be met, a twelve-month gain in the shape of a substantial 583% could be in store. (To watch Olson’s track record, click here)
Turning now to the rest of the Street, 5 Buys and no Holds or Sells have been published in the last three months. Therefore, SGMT boasts a Strong Buy consensus rating. With the average price target standing at $25.33, the upside potential comes in at ~477%. (See SGMT stock forecast)
Y-mAbs Therapeutics (YMAB)
The next stock we’ll look at is Y-mAbs, an oncology-focused biotech company with one foot in the clinical trial stage and one in the commercialization stage. Y-mAbs’ approved drug, DANYELZA, is a monoclonal antibody used in combination with granulocyte-macrophage colony-stimulating factor (GM-CSF) to treat pediatric patients aged 1 year and older, as well as adults, with relapsed or refractory high-risk neuroblastoma in the bone or bone marrow. It received FDA approval for use in the US in November 2020.
While DANYELZA has contributed to Y-mAbs’ revenue stream and is expanding its geographic reach, the company’s SADA platform technology has generated even greater enthusiasm. This innovative approach utilizes a pre-targeted payload delivery system, where antibody constructs form tetramers that precisely bind to tumor targets. Y-mAbs sees this technology as a transformative tool in oncology, with the potential to target a wide array of cancerous tumors with unmatched precision.
Y-mAbs is currently conducting early-stage human clinical trials on GD2-SADA, one of its clinical products associated with this technology. The Phase 1 trial targets solid tumors expressing GD2, such as SCLC, melanoma, and sarcomas, with drug administration scheduled at varying intervals before the standard 177Lu-DOTA treatment. Divided into three parts, the trial is expected to deliver Part A results early next year. This initial phase aims to identify the optimal protein dosage and establish the ideal timing between the administration of the SADA protein and its subsequent payload.
Another key clinical candidate from the SADA platform is CD38-SADA, which, as the name suggests, targets CD38 — a protein found on the surface of certain blood cancer cells. Y-mAbs is advancing a Phase 1 dose-escalation study aimed at evaluating the safety, tolerability, and optimal dosing of CD38-SADA PRIT, a two-step therapy involving CD38-SADA and Lu177-DOTA, in adults with relapsed or refractory Non-Hodgkin Lymphoma.
Among the believers in Y-mAbs’ potential is Oppenheimer analyst Jeff Jones, who writes: “Our enthusiasm is centered on YMAB’s clinical stage SADA platform, as the most advanced pre-targeting platform currently in development for delivery of targeted radiopharmaceutical therapies (TRT). The SADA platform has the potential to address a critical challenge facing TRTs, off target radiation exposure. YMAB’s selection of targets for SADA will be key for their success, with details on future plans anticipated in early 2025. In addition to having two SADA based candidates in the clinic by early 2025, YMAB is generating ~$90M annually from DANYELZA sales in high-risk neuroblastoma (HRNB) which we view primarily as a way to offset SADA R&D investment.”
Backing his enthusiasm, Jones rates YMAB as an Outperform (i.e. Buy), and his $23 price target points toward a one-year upside potential that approaches 144%. (To watch Jones’ track record, click here)
Overall, the stock has picked up 5 analyst reviews – and those break down to 4 Buys and 1 Hold, for a Strong Buy consensus rating. At $31.20, the average price target is more aggressive than Oppenheimer’s and implies ~231% upside potential. (See YMAB stock forecast)
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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.
