The higher the market goes, the more stock investors have to be focused on owning stocks that could continue to grow earnings and outperform. Typically in a big market correction, momentum stocks are the first to go, so earnings are critical. In a series of new research reports, Cowen raises price targets on stocks that are delivering over and above market expectations.

While there is nowhere near the kind of mania that gripped the market in say the late 1990s, and sentiment really is much lower than most would expect, now is the time to really review portfolios and replace momentum winners with earnings growth leaders. The Cowen Focus Call stocks are just the ticket for that kind of rotation. All are rated Outperform.

BioMarin Pharmaceuticals

This is one of Wall Street’s favorites and recently announced earnings were outstanding. BioMarin Pharmaceuticals Inc. (NASDAQ: BMRN) develops and commercializes innovative biopharmaceuticals for serious diseases and medical conditions. The company’s product portfolio comprises five approved products and multiple clinical and preclinical product candidates.

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Over the past decade, BioMarin has become one of the top orphan drug companies, and it looks poised to stay there. The company is expected to post around $875 million in revenue this year and possibly around $1.1 billion next year following the approval of Vimizim, an enzyme replacement therapy for Morquio syndrome. BioMarin had raised its guidance for Vimizim to $200 million to $220 million from $170 million to $200 million.

Cowen notes the company could have big readouts this year, and it expects continued solid performance from BioMarin’s marketed products. It expects the drisapersen FDA Advisory Committee review will be in later this year and handicaps a 60% chance for approval. Others on Wall Street also think drisapersen prospects for approval appear to be good at this point.

Cowen raises the price target for the stock to $175 from $150, while the Thomson/First Call consensus target is $148.59. The stock closed on Wednesday at $143.66.

Ciena

This is a leading maker of fiber optic networking equipment sold to telecom carriers. Ciena Corp. (NYSE: CIEN) is expected to get a large chunk of the Verizon 100 Gbps Dense Wave Division Multiplex Metro optical network build-out. Some Wall Street analysts are thinking the company could see as much as 30% of the total, and some think that Verizon could end up being as much as a 10% customer next year. The Cowen team estimates around 6%.

Ciena leverages its deep expertise in packet and optical networking and distributed software automation to deliver solutions in alignment with its OPn architecture for next-generation networks. The company enables a high-scale, programmable infrastructure that can be controlled and adapted by network-level applications, and it provides open interfaces to coordinate computing, storage and network resources in a unified, virtualized environment.

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In addition to the Verizon deal, a majority of enterprise and Web/cloud data centers are in the process of running high speed 40/100G optical interconnects between their data centers. The Cowen analysts feel that the company can hit 45% gross margins and low to mid-teens operating margins over the next two to three years.

The Cowen price target is a monstrous $35. The consensus target is $28.17. Shares closed on Wednesday at $24.67.
Foot Locker

The Cowen analysts are very bullish on this top retail stock. Foot Locker Inc. (NYSE: FL) is a specialty athletic retailer that operates 3,419 stores in 23 countries in North America, Europe, Australia and New Zealand, through its Foot Locker, Footaction, Lady Foot Locker, Kids Foot Locker, Champs Sports, SIX:02, Runners Point and Sidestep retail stores, as well as its direct-to-customer channels, including Eastbay.com, FootLocker.com and SIX02.com.

The Cowen team points out that consumers are bearing price increases from the top companies like Nike and Under Armour. They also say that currently athletic apparel and footwear companies are continuing to see higher gross margins and return-on-invested-capital, which they think is a source of multiple expansion. That should be just the ticket to get a further lift in the stock price.

Foot Locker investors are paid a 1.4% dividend. The Cowen price target jumps to $77 from $69. The consensus target is posted at $68.86. Shares closed Wednesday at $71.73.

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The three Cowen Focus Calls are all companies currently on an upswing and could provide very solid returns over the next 12 months. Investors with big momentum winners may want to take some gains and deploy capital to these stocks.

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