While markets are on the way up – the S&P 500 is just above 4,700, a record high – some individual stocks have seen their share prices fall. This is not always a poor reflection on the stock; perfectly sound companies can see their share price drop, without indicating a collapse or poor worth.
So, when fundamentally sound stocks plunge, that can spell opportunity for investors. And Wall Street’s analysts have been busy finding those stocks.
With this in mind, we scoured the TipRanks database and picked out two names which have been heading south recently, specifically ones pinpointed by those in the know as representing a buying opportunity. Let's take a closer look.
We’ll start by looking at Albireo Pharma. This clinical-stage biopharma company is researching bile acid modulation as the basis for new treatments to improve the lives of patients with chronic liver disease. Liver function affects most of the body’s systems, and liver disorders are notoriously difficult to live with and treat. Albireo’s bile acid biology research offers the promise of transformative medicines in this field.
For clinical-stage biopharma companies, getting a drug approved is something akin to the Holy Grail – and Albireo has two on the market.
The first, Bylvay, is an IBAT (ileal bile acid transport) inhibitor designed for the treatment of PFIC, or progressive familial intrahepatic cholestasis. This is a chronic, progressive condition that frequently leads to liver failure. The drug was approved in both the US and Europe in July, and delivered $1.1 million in revenue after its launch. Earlier this month, after the drug was put on the market, Albireo presented data from Phase 3 studies of Bylvay, showing long-term benefits and sustained improvement in liver health up to 128 weeks after the beginning of treatment.
The second approved drug is elobixibat, another IBAT inhibitor designed for the treatment of chronic constipation. It’s the first drug of its class to be approved anywhere in the world, and has been on the market in Japan and Thailand under license. Albireo owns commercial rights to the drug in the US, Europe, and China, pending approval.
In its Q3 results, Albireo reported, in addition to the $1.1 million in revenue from Bylvay, receipt of $2.6 million in royalty revenue for elobixibat.
Despite the good news and positive launch results, Albireo shares are down sharply this year, losing 33%. Yet, one analyst thinks there's significant upside ahead for the stock.
Covering Albireo for Piper Sandler, analyst Yasmeen Rahimi sees Bylvay as the key catalyst, with potential for a strong increase in product revenue.
“Following Bylvay's approval for PFIC on Jul. 20, 2021, we saw strong potential for strong uptake in the US and EU... To date, ALBO has generated 28 scripts with 14 patients currently on drug (drug has shipped and reimbursement received). This 50% turnaround time to go from script to reimbursement gives us conviction that ALBO has all mechanisms in place to seamlessly get patients the treatment they need,"Rahimi wrote.
"Looking at the US, ALBO has located 19 Bylvay prescribers and has plans to target the top 100 providers to get Bylvay on the map. In addition, there are 100 patients in clinical trials or early access programs that make excellent candidates to transition to drug, which would increase Bylvay's revenues," the analyst added.
In line with these comments, Rahimi rates the stock an Overweight (i.e. Buy), and her $80 price target indicates her confidence in a one-year upside potential of 220%. (To watch Rahimi’s track record, click here)
Overall, the Strong Buy consensus rating on ALBO stock is unanimous, based on 5 recent analyst reviews. The shares are priced at $24.98 with an average price target of $76, suggesting an upside of 204% in the coming year. (See ALBO stock analysis on TipRanks)
For the next stock, Accolade, we’ll stay in the healthcare segment. Accolade is a personalized healthcare company, using modern data tech to provide personalized solutions that assist people in understanding, navigating, and using both the general healthcare system and their own workplace health benefit packages. The company offers real-time data-based detection of health events, can flag for early interventions, and can recommend best actions for follow-up.
In the most recent quarter, the company launched Accolade One, a first-of-its-kind solution in the healthcare industry. Accolade One integrates clinical and benefit specialists to build long-term relationships with patients and deliver positive health results. The program is designed to overcome barriers in the healthcare system and promote better access to primary and specialist care givers, urgent care, mental healthcare, chronic care management, and expert medical opinions. The program is based on Accolade’s intelligent tech and health advocacy services.
In its recent financial report for fiscal Q2 2022, the company reported $73.3 million in top-line revenues, up ~99% year-over-year. The figure came in above consensus estimate of $70 million. Looking ahead, FY3Q revenue guidance of $74.5M-$76.5M was above the $72 million analysts were expecting. However, EBITDA guidance of ($24.5M)-($21.5M) was below consensus estimates of $(20.3M).
Even though revenues have been rising, Accolade shares are down 26% since the start of this year.
Baird analyst Vikram Kesavabhotla, however, is bullish on the stock, and writes of it: “From a higher level, we are encouraged by the relatively positive commentary regarding the sales pipeline, recent customer wins, and the initial feedback to product acquisitions/launches. ACCD also seems to be evolving its contract structures with the introduction of Accolade One, which could allow the company to take more risk and capture upside from its performance... We continue to see an attractive opportunity supported by a compelling product portfolio and a variety of upside drivers.”
To this end, Kesavabhotla rates ACCD an Outperform (i.e. Buy). His $54 price target implies share growth of 69% in the next 12 months. (To watch Kesavabhotla’s track record, click here)
Wall Street definitely agrees that investors should look twice at Accolate; the stock has 10 positive reviews backing up its Strong Buy rating. The shares are trading for $31.88 and their average price target, of $55.80, suggests a one-year gain ahead of 75%. (See ACCD stock analysis at TipRanks)
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.
